Stackpole Pensions Receive Protection in Company Downsizing
FOR IMMEDIATE RELEASE
March 27, 1998
The Pension Benefit Guaranty Corporation (PBGC) today announced an agreement with Stackpole Corporation, Newton, Mass., that adds $12 million and provides other protections for an underfunded pension plan covering 3,700 workers displaced when the company downsized.
"Stackpole worked cooperatively with PBGC to protect workers' pensions after the company downsized," said PBGC Executive Director David M. Strauss.
Over the past ten years, Stackpole Corporation has sold, merged, or closed almost all of its U.S. facilities, significantly reducing the number of active workers covered by its pension plan to about 25. Under the Employee Retirement Income Security Act (ERISA), when there is a 20 percent or more reduction of the workforce associated with a pension plan, the company must report that fact to PBGC, which can require protection in the form of cash or a bond.
The agreement calls for Stackpole to immediately make a pension contribution of $12 million in cash, of which $9 million cannot be used to offset any required future annual pension contributions during the term of the agreement. The additional contribution improves the plan's funding to more than 85 percent.
PBGC will also hold a second security interest in 50 percent of the stock the company owns in its Canadian affiliate, Stackpole Limited (T:SKD). This second interest is currently valued at $25 million. The agreement will be in effect until December 12, 2001, which is five years after the company complied with the reporting requirement.
In addition, a penalty of $142,000 will be paid by the company as a result of failing to report the workforce reductions to PBGC in a timely manner. The company, immediately upon becoming aware of its error, notified PBGC and fully cooperated throughout negotiations.
Stackpole had facilities in various parts of the United States, including Farmville, Va., St. Mary's, Pa., Kane, Pa., Frenchtown, N.J., Cleveland, Ohio and Raleigh, N.C. that manufactured and assembled metal components for automotive engines and transmissions.
PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974 to guarantee payment of basic pension benefits earned by 42 million American workers and retirees participating in about 45,000 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. 98-18