UPDATE: PBGC To Assume $153 Million Of Metaldyne Pension Plan
31 Julio 2009 - 11:08AM
Noticias Dow Jones
The U.S. Pension Benefit Guaranty Corp. will assume
responsibility for a pension plan covering 10,770 workers and
retirees from auto supplier Metaldyne Corp., the agency announced
Friday morning.
The PBGC expects to take over $153 million of Metaldyne's
underfunded pension plan. Currently, the bankrupt company's assets
fund only 53% of the plan. The company faced a shortfall of $157
million on its $334 million retirement benefit plan.
The PBGC will immediately take over the Metaldyne assets and
assume control of the current plan, which ends on Friday. Metaldyne
employees will no longer be able to accumulate benefits. However,
workers will retain benefits they have already earned, and retirees
will continue to receive their monthly checks without interruption,
said PBGC spokesman Gary Pastorius.
Metaldyne has not yet announced whether it will have any defined
benefit plan for future employees and did not immediately return a
call for comment.
Struggling amid the slowdown in the auto sector, Metaldyne filed
for bankruptcy in late May and is attempting to reorganize itself.
The company produces parts for car makers, including Ford Motor Co.
(F), General Motors Co. and Chrysler Group LLC.
The PBGC, a federal corporation that guarantees payment of
roughly 29,000 private company benefits, already faced a deficit of
$33.5 billion prior to Friday's announcement. Assumption of
Metaldyne's unfunded liabilities will increase the PBGC's claims by
$153 million, as the move was not included in the agency's 2008
budget.
Metaldyne is the most recent in a string of auto-suppliers whose
retirement plans that have been seized by the agency.
Earlier this month, PBGC agreed to take on $6.2 billion in
pension liabilities from auto supplier Delphi Corp. (DPHIQ), which
is in bankruptcy protection. That pension rescue is the PBGC's
second-largest ever, ranked by dollars, after that of UAL Corp.'s
(UAUA) United Airlines in 2005, which totaled $7.5 billion.
In an attempt to mitigate how many pensions PBGC is required to
take over, the agency launched a campaign earlier this year
encouraging companies to come to it and negotiate changes to
strained pension plans before plant closures or plan
terminations.
-By Kristina Peterson, Dow Jones Newswires; 202-862-6619;
kristina.peterson@dowjones.com
(Darrell A. Hughes contributed to this report)