The Pension Benefit Guaranty Corporation (PBGC) has taken over the underfunded pension plan covering more than 10,000 people who worked for the bankrupt Outboard Marine Corporation (OMC). The Waukegan, Ill.-based manufacturer of recreational boats and engines is now in liquidation. Since no one is left to administer the pension plan, PBGC has become trustee in order to administer the plan and pay benefits.
"PBGC guarantees to pay benefits to all covered workers when they are eligible to retire, up to the maximum amount allowed by law" said John Seal, Acting Executive Director of PBGC. "And we will make sure there is no interruption in monthly benefit checks for those OMC workers who have already retired."
Early this year, OMC asked PBGC to take over the plan. However, on February 27, 2001, the OMC board of directors notified PBGC that it had decided instead to try to terminate the plan in the private sector by finding an insurance company willing to assume OMC's pension obligations. After OMC confirmed this with PBGC on March 15, 2001, the agency suspended further action to take over the pension plan. However, the company's attempts to complete a private sector termination were unsuccessful.
The Outboard Marine Corporation Employees' Retirement Plan terminated as of August 17, 2001. Under federal pension law, the maximum pension guaranteed for workers in plans that terminate in 2001 is $3,392.05 a month (or $40,704.60 a year) for persons retiring at age 65. Maximum guarantees are adjusted for retirees at other ages or those who elect survivor benefits. After a review of plan records, PBGC will notify affected retirees if it has to reduce payment of certain supplements and benefit improvements because the additional amounts may not be fully guaranteed under federal pension law.
Workers and retirees do not need to take any action. Anyone with questions about benefits or wishing to retire may contact PBGC's Customer Service Center toll-free at 1-800-400-7242. For TTY/TDD users, call the federal relay service toll-free at 1-800-877-8339 and ask to be connected to 800-400-7242. PBGC's Web site, provides a link to more information on Outboard Marine pensions.
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 43 million American workers and retirees participating in nearly 38,000 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 PBGC's investment returns.