WASHINGTON - The Pension Benefit Guaranty Corporation and Sears Holdings Corporation have reached a new agreement that upon closing provides approximately $500 million in funding for Sears’ two pension plans, including contributions already made by Sears since August 2017. The pension plans cover about 100,000 participants. Closing on this agreement should occur in about three months.
The new agreement amends the March 2016 agreement between PBGC and Sears, under which Sears agreed to protect the assets of certain special purpose subsidiaries holding real estate and intellectual property for the benefit of the Sears pension plans.
Earlier this year, PBGC and Sears amended the March 2016 agreement to accommodate the sale of the Craftsman brand. Now, this new amendment to the March 2016 agreement allows Sears to monetize the real estate protected in the March 2016 agreement, with the proceeds used to fund the pension plans. The non-real estate related pension protections in the March 2016 agreement are unaffected by the new agreement.
PBGC works collaboratively with pension plan sponsors to encourage and support the continuation of their plans. One of the ways PBGC does this is to structure meaningful financial protections for plan participants and the pension insurance program, while enabling the sponsor to effectuate its business plan.
PBGC protects the pension benefits of nearly 40 million Americans in private-sector pension plans. The agency operates two separate insurance programs — one covering pension plans sponsored by a single employer and another covering multiemployer pension plans, which are sponsored by more than one employer and maintained under collective bargaining agreements. PBGC is currently responsible for the benefits of about 1.5 million people in failed pension plans. PBGC receives no taxpayer dollars. Its operations are financed by insurance premiums, investment income, and, for the single-employer program, assets and recoveries from failed single-employer plans. For more information, visit PBGC.gov.