The Pension Benefit Guaranty Corporation (PBGC) today announced it has reached an agreement with Fruit of the Loom, Inc. (NYSE: FTL) that protects the pensions of nearly 3,500 workers and retirees of its Acme Boot Company affiliate. Fruit of the Loom (Fruit) will assume sponsorship of the plan and pay all required future contributions, and Acme will pay missed contributions.
"Fruit of the Loom and PBGC worked together to forge an agreement that better protects workers' pensions at Acme Boot," said PBGC Executive Director David M. Strauss.
In May 1993 Acme closed its Clarksville, Tenn. plant, significantly reducing the number of active workers covered by the pension plan. In 1997 Acme failed to make two required contributions to the plan totaling $500,000. By law, PBGC may terminate a pension plan if minimum funding requirements are not met. PBGC determined that Fruit was a member of Acme's controlled group of companies at the time of the plant closing and therefore was potentially liable under federal pension law (sec. 4062(e) of the Employee Retirement Income Security Act of 1974) if the plan terminated within five years of the plant closing. As part of the agreement, any foreign unit of Fruit will be subject to U.S. jurisdiction with respect to Fruit's own pension plans and the Acme plan, which has assets of $41 million and liabilities of $56 million.
Acme formerly operated 90 retail outlets to supplement its wholesale Western and casual boot business. The company closed these outlets and the Clarksville plant. Production continues at El Paso and Houston, Tex.
PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974 to guarantee payment of basic pension benefits earned by some 42 million American workers and retirees participating in about 45,000 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.