PBGC to Pay Pension Benefits at Erving Industries
FOR IMMEDIATE RELEASE
March 15, 2011
WASHINGTON—The Pension Benefit Guaranty Corporation will pay the pensions of almost 900 workers and retirees of Erving Industries, Inc., a manufacturer of tissue paper based in Erving, Mass.
PBGC, which safeguards the pensions of 44 million Americans, stepped in because the company could not emerge from bankruptcy without terminating its three pension plans.
"PBGC is America's retirement safety net," said Director Josh Gotbaum. "When companies fail, we keep their pensions going."
Erving Industries retirees will continue to receive their monthly benefit without interruption, and other workers will receive their pensions when they are eligible to retire. Within the next several weeks, PBGC will send notification letters to all participants in the Erving Industries pension plans.
In general, PBGC will pay the benefit that a retiree would earn if they retired at age 65. However, there is a legal maximum, $54,000 per year for a 65-year-old, and lower for people who retire before age 65 or choose survivor benefits. In addition, certain early-retirement payments and recent benefit increases are generally not covered.
"Erving Paper Industries employs 125 people and is an important part of the region's economy," said Congressman John W. Olver (D-Mass.1). "Over the past few years, the harsh economic climate revealed that certain pensions of past and current employees of Erving Paper were in jeopardy. The Pension Benefit Guaranty Corp. has taken responsibility for three underfunded pension plans covering a total of 877 current or former Erving employees. I am pleased that, thanks to the PBGC, both former and current employees can now retire with peace of mind."
In the Massachusetts 1st congressional district, the PBGC paid over $4 million in pension benefits to about 1,200 residents last year. The agency also expects to send checks to about 700 other district residents upon retirement age.
In total, PBGC contributed more than $92 million to the Massachusetts economy through benefit payments to more than 15,000 residents during 2010.
Further information is available at the PBGC Web site, www.pbgc.gov, or by calling toll-free 1-800-400-7242. TTY/TDD users should call the federal relay service toll-free at 1-800-877-8339 and ask for 800-400-7242.
Erving Industries retirees who get their pensions from the PBGC may be eligible for the federal Health Coverage Tax Credit. The PBGC Web site provides details at http://www.pbgc.gov/wr/benefits/hctc/hctc-faqs.html.
PBGC, which receives no taxpayer funds, is taking over the pension plans' assets and will use insurance premiums to pay covered benefits. Together, the pension plans have $16.8 million to cover $32.9 million in benefit promises, according to PBGC estimates. The agency expects to pay $14.7 million of the $16.1 million shortfall.
PBGC's action will not have a significant impact on the agency's financial statements. PBGC included an estimate of the Erving Industries benefit payments in its fiscal year 2010 financial statements, in keeping with generally accepted accounting principles.
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PBGC No. 11-26