WASHINGTON—The Pension Benefit Guaranty Corporation has reached a settlement with Bendix Commercial Vehicle Systems LLC, which ends a $16.6 million Federal lawsuit over pension debt incurred from the company's plant closing in Frankfort, Ky.
Director of Communications J. Jioni Palmer characterized the settlement as one of many actions embodying the agency's new approach to such cases.
"Plan sponsors have for years asked us to pay attention to whether company actions really put their pensions at risk, and now we're doing so," Palmer said. "When companies show the commitment and ability to protect their workers and retirees, we are now working with them to recognize that."
Federal law imposes liability when more than 20 percent of a pension plan's members lose their jobs in a shutdown. All the Frankfort plant's 63 workers were displaced after it closed in December 2007.
PBGC filed a lawsuit in the US District Court in Cleveland on Sept. 16, 2011, following a dispute over pension obligations related to the shutdown.
Since the plant closing, Bendix has made $8.2 million in funding contributions beyond its normal requirements, which improved the funding status of the pension plan.
Under the settlement, PBGC won't require Bendix to put up collateral for the remaining $8.4 million in pension liability, provided the company remains financially strong until the end of the year. If the company's financial position significantly weakens during that time, Bendix will provide a letter of credit for $8.4 million.
"PBGC is always looking to work with companies so their workers and retirees have better retirement security," Palmer said. "We're glad we reached common ground with Bendix because the real winners are their workers and retirees."
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.