WASHINGTON — The Pension Benefit Guaranty Corporation is taking steps to assume responsibility for Sears Holdings Corporation’s two defined benefit pension plans, which cover about 90,000 people. The national retail chain headquartered in Hoffman Estates, Illinois, operates through its subsidiaries, which include Sears, Roebuck and Co. and Kmart Corporation.
Sears filed for Chapter 11 protection on October 15, 2018. PBGC is stepping in to become responsible for the company’s two pension plans because it is clear that Sears’ continuation of the plans is no longer possible.
“Our mission is to protect the retirement income of plan participants and their families,” said PBGC Director Tom Reeder. “When it’s no longer possible for plan sponsors to maintain their pension plans, PBGC plays the crucial role of providing lifetime retirement income for the workers and retirees.”
PBGC has worked with Sears for several years to improve funding for the company’s plans. PBGC estimates that the Sears’ plans are underfunded by $1.4 billion leaving them 64 percent funded.
PBGC is seeking to terminate the plans as of January 31, 2019. The agency will become responsible for the pension plans when Sears agrees or a court orders plan termination.
Until PBGC assumes responsibility for the pension plans, they remain the responsibility of Sears Holdings Corporation. Retirees will continue to receive benefits without interruption, and future retirees can apply for benefits as soon as they are eligible. Sears pension plan participants with questions about their benefits should contact the Service Center at 1-800-953-5390*, Monday through Friday 8:00 a.m. to 6:00 p.m., Central Time.
PBGC covers Sears’ two pension plans under its Single-Employer Insurance Program. Benefit accruals under the plans have been frozen since 2005. PBGC expects that its guarantees will cover the vast majority of pension benefits earned under these plans. For more information on PBGC and benefits guaranteed by PBGC for single-employer pension plans, see PBGC Guaranteed Benefits. For additional information see Questions and Answers for Participants in the Sears Holdings Corporation Pension Plans.
Termination of the Sears pension plans will not have a significant effect on PBGC's financial statements because the claim was previously included in the agency's fiscal year 2017 and 2018 financial statements, in accordance with generally accepted accounting principles.
*On April 30, 2019, the above press release has been amended to reflect the current Service Center Number.