WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced it has assumed responsibility for the underfunded pension plan covering more than 1,100 workers and retirees of News-Journal Corp., a newspaper publishing company in Daytona Beach, Fla.
The PBGC took action because News-Journal's assets were sold under receivership and the buyer did not assume the pension plan. 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 Pension Plan of News-Journal Corporation is 65 percent funded, with assets of $28.20 million to cover $43.66 million in benefit liabilities. The PBGC expects to be responsible for $15.39 million of the $15.47 million shortfall.
The PBGC will take over the assets and use insurance funds to pay guaranteed benefits earned under the plan, which ended on March 23, 2010. The agency assumed responsibility for the plan on Aug. 6, 2010.
Within the next several weeks, the PBGC will send notification letters to all participants in the News-Journal plan. Under federal pension law, the maximum guaranteed pension at age 65 for participants in plans that terminate in 2010 is $54,000 a year. 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.
News-Journal is the publisher of the Daytona Beach News-Journal and six local shopping guides through its wholly-owned subsidiary, the Volusia Pennysaver, Inc. On April 17, 2009, the communications company, Cox Enterprises Inc., asked the U.S. District Court for the Middle District of Florida to place News-Journal into receivership. The request was made following News-Journal's inability to pay a judgment in Cox's favor.
On Jan. 6, 2010, the court-appointed receiver, James W. Hopson, and Cox filed a joint motion for approval of an asset purchase agreement that would establish the sale of substantially all of News-Journal's publishing assets to Halifax Media Acquisition LLC. The sale was approved by the District Court on March 23, 2010.
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.
News-Journal 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/workers-retirees/benefits-information/content/page13692.html.
Assumption of the plan's unfunded liabilities will increase the PBGC's claims by $15.4 million and was not previously included in the agency's fiscal year 2009 financial statements.
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.