PBGC Moves to Protect Pensions at Sea Island Company
FOR IMMEDIATE RELEASE
October 29, 2010
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced it is moving to assume responsibility for the underfunded pension plan covering almost 2,000 workers and retirees of bankrupt Sea Island Company, a closely-held hospitality and real estate corporation based in St. Simons Island, Ga.
The pension insurer is stepping in because the underfunded retirement plan will be unable to make benefit payments and faces abandonment following the sale of substantially all the company's assets, in a transaction that does not include the pension plan. By taking action now, the PBGC prevents further deterioration of the plan's condition.
The Sea Island Company Retirement Plan is 48 percent funded, with assets of $37.3 million to cover benefit liabilities of $77.2 million, according to PBGC estimates. The agency expects to be responsible for $36.2 million of the plan's $39.9 million shortfall.
The PBGC will take over the assets and use insurance funds to pay guaranteed benefits earned under the plan, which terminates as of October 29, 2010. Retirees and beneficiaries will continue to receive their monthly benefit checks without interruption, and other workers will receive their pensions when they are eligible to retire. Until the PBGC becomes trustee of the pension plan, the plan will continue to be sponsored by Sea Island Company. The agency will send notification letters to all plan participants when it becomes trustee.
Under federal pension law, the maximum guaranteed pension at age 65 for participants in plans that terminate in 2010 is $54,000 per year. The maximum guaranteed amount is lower for those who retire earlier or elect survivor benefits. In addition, certain early retirement subsidies and benefit increases made within the past five years may not be fully guaranteed.
The PBGC will not have specific information about Sea Island Company pension benefits until the agency becomes trustee of the plan. Workers and retirees with general questions about the PBGC and its benefit guarantees may consult the PBGC web site, www.pbgc.gov.
Sea Island Company retirees who draw a benefit from the PBGC may be eligible for the federal Health Coverage Tax Credit. Further information may be found on the PBGC Web site at http://www.pbgc.gov/workers-retirees/benefits-information/content/page13692.html.
Assumption of the Sea Island Company plan's unfunded liabilities will have no significant effect on PBGC's financial statements because an estimate of the claim will be included in the agency's fiscal year 2010 financial statements, in accordance with generally accepted accounting principles.
The PBGC is a federal agency that guarantees payment of private pension benefits when companies and pension plans fail. It protects some 44 million Americans in over 29,000 private defined benefit pension plans. The PBGC pays benefits using insurance premiums and assets and other recoveries from plans and their sponsors; it receives no taxpayer funds.
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PBGC No. 11-09