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Federal PBGC Takes More Pension Plans into Its Portfolio



The Pension Benefit Guaranty Corporation (PBGC) recently announced it will take over the pensions of more than 8,500 retirees in Standard Register Company.

After filing for bankruptcy in March 2014, Standard Register, a printing and marketing communications firm based in Dayton, Ohio was no longer able to fund its pensions.

The federal agency intervened following bankruptcy proceedings, in which Standard Register sold the majority of its assets to Taylor Corp, which is not assuming responsibility for covering obligations to the Standard Register pension plans. The PBGC estimates the plan is only 47% funded with assets of $289M to pay ab
out $611M in benefit liabilities.

With PBGC assuming the plan’s responsibilities, it will pay up to the limit of $60,136 per year to future and current retirees in the plan once they reach the age of 65.

In February 2015, PBGC also took over the pension plan of 1,600 current and future retirees of an oil refinery and oil storage terminal in the U.S. Virgin Islands, Hovensa LLC, after it closed its operations and abandoned its pension plans.  

In 2014, the PBGC took over the plans of 1,400 retirees from White Rose Inc., an independent food wholesaler based in New Jersey. It also took over the pensions of 4,500 retirees of Reichhold Inc., a polyester risen supplying company based in North Carolina.  

The PBGC was formed in 1974 as an independent agency of the U.S. government under the Employee Retirement Income Security Act (ERISA). The agency serves as a backstop for the pension plans of private companies throughout the U.S. who can no longer afford to pay its retirees.

According to the PBGC website, it currently insures up to 44 million Americans across the country.

The 2013 PBGC Fiscal Year Projection Report suggests the agency could become insolvent by 2020.

In December 2014, Congress passed the Congressional Multiemployer PensionReform Act of 2014, a $1.1 trillion spending bill that would prevent pension plans from becoming insolvent. 

In 1975, 40% of workers were in an active defined pension plan according to the article, “The Future of Retirement Plans” by the Wall Street Journal. Today however, that number has dropped to 17% and is expected to continue on the downward trend.

 

Photo Courtesy of Wikipedia Commons


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