PBGC Moves to Take Over Anchor Glass Pensions
FOR IMMEDIATE RELEASE
January 10, 1997
The Pension Benefit Guaranty Corporation (PBGC) is taking action to protect the underfunded pensions of 15,600 workers and retirees of the Anchor Glass Container Corporation which is being sold. "Pensions must be addressed during corporate restructuring; and we intend to take all necessary steps to keep workers' pensions and the insurance program strong," said PBGC Executive Director Martin Slate.
PBGC will ask the U.S. District Court in Brooklyn, NY next week to terminate three Anchor Glass pension plans, underfunded by about $185 million, effective January 9, 1997, and to have the federal pension insurance agency named trustee.
The glass container manufacturer, based in Tampa, FL, with facilities in 11 states, filed for Chapter 11 protection last September in the U.S. Bankruptcy Court in Wilmington, DE, and is in the process of selling its assets. PBGC's analysis is that the buyer assuming most of the company cannot support the pensions and completion of the sale as now proposed would pose a risk to the pension insurance program.
The sale would remove Anchor Glass from the control of its Mexican parent, Vitro, Sociedad Anonima. Under pension law, the plan sponsor as well as other companies within a corporate group are responsible for pension liabilities. With district court approval of PBGC's request to terminate and take over the Anchor Glass pension plans, Vitro, which has a number of U.S. facilities, will remain liable for the pensions.
While in bankruptcy, Vitro has not supported Anchor's liquidity needs, including funding contributions to the pension plans. PBGC has an $18.9 million lien on a Vitro facility in Laredo, Texas, Vitro Packaging, to cover two pension funding payments that Anchor Glass has failed to make. PBGC has been and continues to negotiate with Vitro for protections for the pensions. However, thus far, those efforts have not been successful.
The vast majority of the workers and retirees are fully covered by PBGC's guarantee. The maximum guarantee for plans that terminate in 1997 is $2,761.36 per month, approximately $33,000 per year, for persons retiring at age 65 or later. The guarantee is lower for those who retire early. Workers and retirees do not need to take any action.
PBGC is a federal agency created by the Employee Retirement Income Security Act of 1974 to guarantee payment of basic pension benefits earned by workers. It covers nearly 42 million American workers and retirees participating in about 55,000 private-sector defined benefit pension plans. The agency receives no funds from general tax revenues. Operations are financed largely by insurance premiums paid by companies that sponsor pension plans and by investment returns.
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PBGC No. 97-12