WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) and LandAmerica Financial Group Inc. of Glen Allen, Va., today announced an agreement to protect the company's cash balance pension plan covering some 9,600 workers and retirees. The agreement must be approved by the U.S. Bankruptcy Court in Richmond, Va., where LandAmerica's chapter 11 case is pending.
Although LandAmerica believes the plan currently complies with funding standards for ongoing pension plans under federal law, the PBGC believes additional assets are needed to complete a standard, fully funded termination of the plan or to pay claims to the PBGC in the event the plan terminates and is trusteed by the PBGC.
Under the agreement, if any LandAmerica subsidiary subsequently is sold, LandAmerica may elect to escrow for the pension plan 30 percent of net cash or cash equivalent proceeds realized from such sale for the benefit of funding a standard termination of the plan or, if the plan is not terminated in a standard termination, to be applied against any Bankruptcy Court approved claims of the PBGC.
In consideration for LandAmerica's agreement to escrow the proceeds, the PBGC will release any and all such sold subsidiary or subsidiaries from any liability arising from the cash balance pension plan. Any escrowed assets not payable to the plan or the PBGC will belong to LandAmerica.
The LandAmerica Cash Balance Plan is currently administered by LandAmerica and has not been taken over by the PBGC. The agreement comes after the PBGC announced on May 11 that it would terminate and assume responsibility for the LandAmerica pensions.
The PBGC is a federal corporation created under the Employee Income Retirement Security Act of 1974. It currently guarantees payment of basic pension benefits earned by 44 million American workers and retirees participating in over 29,000 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.