WASHINGTON—The Pension Benefit Guaranty Corporation, which protects American pensions, is fighting a move by Harry & David Holdings Inc. to end the pensions of its 2,700 workers and retirees.
"We work to preserve both businesses and their pensions," said PBGC Director Josh Gotbaum. "PBGC doesn't ask a company to risk its business if it can't afford its pension plan, but many companies have gone through bankruptcy with their pensions intact, and we think Harry & David might be one of them."
Harry & David, a Medford, Ore.-based marketer of specialty gift baskets, is in bankruptcy. The company has claimed that it can't reorganize unless it terminates its pension plan.
However, PBGC's financial analysis shows that the company will be able to emerge from bankruptcy without cutting off its workers' pensions. The bankruptcy court will hold a hearing on the issue on July 22, 2011.
If the pension plan is terminated, PBGC will pay pension benefits to Harry & David employees. However, because of limits set by law, some retirees might get reduced pensions, and PBGC does not insure health benefits at all.
"Time after time, PBGC has worked successfully with companies and their creditors to make sure that the bankruptcy process recognizes the rights of pensioners, too," Gotbaum said. "We know that Harry & David can reorganize successfully. We'd just like to make sure that their employees and retirees share in that success. Preserving a plan is almost always better for employees."
The PBGC protects the pension benefits of 44 million Americans in 27,500 private-sector pension plans. The agency is directly responsible for paying the benefits of more than 1.5 million people in failed pension plans. PBGC receives no taxpayer dollars and never has. Its operations are financed by insurance premiums and with assets and recoveries from failed plans.