WASHINGTON — Under a court agreement announced today, the Pension Benefit Guaranty Corporation will assume benefit payments for more than 9,500 workers and retirees from two of Hawker Beechcraft, Inc.'s pension plans. Under a separate settlement, Hawker will pay $2.5 million to those salaried retirees whose benefits exceed those paid by PBGC under rules set by Congress.
"Today's outcome is good," said J. Jioni Palmer, Senior Advisor and Director of Communication and Public Affairs. "When we started this process three plans were on the chopping block, and by working with the company we were able to save one and help retirees in the others. This is what happens when people are willing to work together."
Palmer said PBGC helped the salaried retirees achieve a $2.5 million award through its support of the settlement of their lawsuit against the company. Also under the settlement, PBGC received a $419 million unsecured claim against Hawker Beechcraft in the bankruptcy case.
On Thursday, the bankruptcy court approved a settlement between Hawker Beechcraft and PBGC in which two plans covering salaried employees would be assumed by the agency. The third plan, with 8,300 participants, will be frozen and remain with the company.
"At PBGC we always want to preserve retirement income, we want companies to successfully reorganize, and we want jobs to continue," said Sandy Rich, PBGC's Chief of Negotiations and Restructuring. "This settlement makes those things happen."
PBGC will pay all pension benefits earned by Hawker Beechcraft retirees up to the legal maximum of about $56,000 a year for a 65-year-old. Most retirees who receive benefits from PBGC, 85 percent, receive the full amount of the promised benefit.
When PBGC takes responsibility for the pension plans it will send notification letters to their members. Until then, the plans will continue under company sponsorship.
PBGC protects the pension benefits of more than 40 million Americans in 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. For more information, visit PBGC.gov.