WASHINGTON — The Pension Benefit Guaranty Corporation will pay retirement benefits for nearly 8,000 current and future retirees who participated in the Avaya, Inc. Pension Plan for Salaries Employees.
Avaya filed for Chapter 11 protection last January and is emerging from bankruptcy. The company asked the bankruptcy court to allow it to end its salaried plan. That motion was granted, and termination of the pension plan went into effect on November 30, 2017, the date proposed by Avaya in notices sent to participants.
The Avaya salaried plan is 63% funded, with plan assets of $1.6 billion and liabilities for future benefits of $2.5 billion, and thus is underfunded by $938 million. Benefit accruals under the plan have been frozen since 2003.
PBGC will pay pension benefits earned by retirees of Avaya’s salaried plan, up to the legal limits.
Retirees will continue to receive benefits without interruption, and future retirees can apply for benefits as soon as they are eligible.
A separate plan, the Avaya, Inc. Pension Plan, which covers nearly 7,000 participants, remains ongoing and is sponsored by the reorganized Avaya.
Retirees who will receive a benefit from PBGC may be eligible for the federal Health Coverage Tax Credit (HCTC), an IRS tax credit for health care insurance premiums. Visit PBGC's HCTC webpage, to view information on the tax credit.
Avaya, incorporated in 2000 when Lucent Technologies spun off its enterprise communications group, provides contact center and unified communications products and services worldwide. Avaya is headquartered in Santa Clara, California.
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.