WASHINGTON — The Pension Benefit Guaranty Corporation announced today it is moving to protect the retirement benefits of nearly 12,800 workers and retirees of Saint-Gobain Containers, Inc., a glass container manufacturer based in Muncie, Indiana with facilities in eleven states across the U.S.
The agency is stepping in because the company is being sold to a below investment grade company, potentially jeopardizing the future of the pension plan.
"We are acting now to prevent the increased risk of a future pension default created by the sale," said Sanford Rich, PBGC's Chief of Negotiations and Restructuring. "It is best for companies to keep their pension promises, but when they engage in transactions that put pensions in peril, PBGC will do what's necessary to make sure they support those promises."
On Jan. 17, 2013, Compagnie de Saint-Gobain agreed to sell Saint-Gobain Containers for $1.7 billion to a unit of Ardagh Group S.A., a Luxembourg-based glass and metal packaging company. The transaction would move the pension plan from Compagnie de Saint-Gobain, which is an investment grade company, to Ardagh, which is not.
Upon termination, PBGC will pay all pension benefits earned by the company's retirees up to the legal limit of about $57,500 a year for a 65-year-old. Eighty-five percent of retirees who receive benefits from PBGC receive the full amount of the promised benefit.
According to PBGC estimates, the plan is 63 percent funded with $876 million in assets to pay $1.4 billion in benefits. The agency expects to cover $497 million of the $524 million shortfall.
Until PBGC becomes trustee, the plan remains under the control of Saint-Gobain Containers. Plan participants will be notified by letter when the agency takes responsibility. At that time, retirees will continue to get benefits without interruption, and future retirees can apply for benefits when eligible.
Participants with questions about their pension benefits should contact the plan administrator. PBGC won't be able to address concerns about benefits until it takes responsibility for the plan.
PBGC protects more than 40 million Americans in private-sector pension plans by paying benefits when companies cannot. 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.