WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced it has assumed responsibility for seven plans covering almost 2,360 workers and retirees of the Chicago Sun-Times, a daily newspaper based in Chicago, Ill.
The PBGC took action because the company sold substantially all of its assets in bankruptcy proceedings and the buyer did not assume the plans. Retirees will continue to receive their monthly benefit payments without interruption, and other workers will receive their pensions when they are eligible to retire.
According to PBGC estimates, the seven plans are 53 percent funded, with $55.8 million in assets to cover $106.5 million in benefit liabilities. The PBGC expects to be responsible for $49.1 million of the $50.7 million shortfall.
The plans are:
- Chicago Sun-Times Office Employees' Pension Plan
- Chicago Sun-Times Guild Employees' Pension Plan
- 1986 Chicago Sun-Times Pension Plan
- Pioneer Newspapers Inc. Retirement Income Plan
- Retirement Plan for Bargaining Employees of Daily Southtown Inc.
- Retirement Plan for Employees of Star Publications Inc.
- Pension Plan for Salaried Employees of Holladay-Tyler Printing Corporation
The PBGC will take over the assets and use insurance funds to pay guaranteed benefits earned under the plans, which ended on Oct. 8, 2009. The agency assumed responsibility for the plans on Aug. 4, 2010.
Within the next several weeks, the PBGC will send notification letters to all participants in the Chicago Sun-Times plans. Under provisions of the Pension Protection Act of 2006, the maximum guaranteed pension the PBGC can pay is determined by the legal limits in force on the date of the plan sponsor's bankruptcy. Therefore, participants in the plan are subject to the limits in effect on March 31, 2009, which set a maximum guaranteed amount of $54,000 a year for a 65-year-old.
The maximum guaranteed amount is lower for those who retire earlier or elect survivor benefits. In addition, certain early retirement subsidies and benefit increases made within the past five years may not be fully guaranteed.
The Chicago Sun-Times and its subsidiaries experienced a severe decline in advertising revenue largely brought on by decreasing ad buys from the automotive and housing sectors, as well as companies posting employment opportunities. The company had an 18.2 percent drop in advertising revenue in the fourth quarter of 2008 and expected a continued decline of 30 percent in 2009. The Sun-Times and its units filed for Chapter 11 protection in the U.S. Bankruptcy Court in Wilmington, Del., on March 31, 2009. On Oct. 8, 2009, the court approved the sale of substantially all the company's assets to STMG Holdings LLC.
Workers and retirees with questions may consult the PBGC Web site, www.pbgc.gov or call 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 for 800-400-7242.
Sun-Times retirees who draw a benefit from the PBGC may be eligible for the federal Health Coverage Tax Credit. Further information may be found on the PBGC Web site at http://www.pbgc.gov/wr/benefits/hctc/hctc-faqs.html.
Assumption of the plan's unfunded liabilities will have no significant effect on the PBGC's financial statements because the claim was previously included in the agency's fiscal year 2009 financial statements, in accordance with generally accepted accounting principles.
The PBGC is a federal corporation created under the Employee Retirement Income 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.