PBGC Takes Allis-Chalmers Plan to Secure Pensions
FOR IMMEDIATE RELEASE
September 30, 1997
The Pension Benefit Guaranty Corporation (PBGC) today announced it is taking over the Allis-Chalmers pension plan, which is underfunded by $63 million, to protect almost 9,000 former workers and retirees. PBGC is acting because neither the company nor its subsidiaries can support the plan.
"Former workers and retirees can be assured that because of the federal pension insurance program they will receive their pensions," said PBGC Executive Director David M. Strauss.
The company that once manufactured lift trucks, farm and hydro-electric equipment is now primarily a machine repair facility, with 40 active workers, only five of whom are covered by the plan. PBGC has determined that in light of the declining workforce the cost to the company of providing pension coverage for former workers has become unreasonably burdensome. In addition, the Houston machine repair subsidiary, Houston Dynamic Services, Inc., would not be able to remain in business if it had to support the ongoing pension plan.
The company has not made any contributions to the pension plan since January 1996, and asked PBGC to take over the plan, which has assets of $209 million and liabilities of $272 million. As a protection for the plan, beginning in 1996, PBGC placed liens for the missed contributions on the Milwaukee area headquarters of the corporation and the machine repair facility in Texas. In return for assuming the plan, PBGC will receive 35 percent of Allis-Chalmers common stock in settlement for the underfunding.
The date of plan termination is April 14, 1997, the date the company told participants the plan would end. Almost all plan participants will receive the same benefits they would have received from Allis-Chalmers. The maximum pension guaranteed for workers in plans that terminate in 1997 is $2,761.36 per month ($33,136.32 annually) for persons retiring at age 65 or later. The guarantee is lower for those who retire early or have survivor's benefits.
Workers and retirees do not need to take any action. Anyone with questions about benefits or wishing to retire may contact PBGC's field benefit administrator for Allis-Chalmers pension plans at 1-800-475-4078.
Previously, PBGC had taken over 11 other Allis-Chalmers pension plans to protect 9,000 covered workers and is now paying $3.8 million annually in pension benefits to these former Allis-Chalmers workers. These pension plans, underfunded by over $170 million, were terminated in 1985.
PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974 to guarantee payment of basic pension benefits earned by more than 42 million American workers and retirees participating in about 50,000 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 investment returns.
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PBGC No. 97-44