The Pension Benefit Guaranty Corporation (PBGC) today announced it will take over the Memorex-Telex Corporation Pension Plan to protect the pensions of almost 4,000 workers and retirees. The pension plan is underfunded by $26.5 million.
Memorex, the U.S. subsidiary of Memorex-Telex, N.V. of the Netherlands, was a computer services business. The U.S. operations were sold to various companies in a bankruptcy liquidation. None of the purchasers intend to continue the pension plan, which is only 68 percent funded, with assets of $55.9 million and liabilities of $82.4 million. The company had facilities in San Jose, CA, Raleigh, NC, Tulsa, OK and Dallas/Ft. Worth, TX.
"Because the pension plan is insured, workers will have pensions when they retire, and pension benefits will continue for retirees without interruption," said PBGC Acting Executive Director John Seal.
The pension plan was frozen on October 31, 1994, at the time of a prior bankruptcy, which means that no worker earned benefits after that date. The date of plan termination is December 31, 1996, the date announced by the company for plan termination. Memorex completely shut down on March 31, 1997.
Retirees and future retirees will receive benefits as provided for under the plan, subject to PBGC's legal limits. The maximum pension guaranteed for workers in plans that terminate in 1996 is $2,642.05 monthly (approximately $31,700 annually) for persons retiring at age 65 or later. The guarantee is lower for those who retire early or have survivor's benefits.
Workers and retirees do not need to take any action. Anyone with questions about benefits or wishing to retire may contact PBGC at 1-800-736-2444.
PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974 to guarantee payment of basic pension benefits earned by more than 42 million American workers and retirees participating in about 50,000 private-sector defined benefit pension plans. The agency receives no funds from general tax revenues. Operations are financed largely by insurance premiums paid by companies that sponsor pension plans and investment returns.