The Kannapolis, North Carolina -based company has two pension plans – the Pillowtex Corp. Retirement Plan for Hourly Employees and Pillowtex Corp. Retirement Plan for Salaried Employees – with assets of approximately $271 million and liabilities of $460 million. Of the $189 million in total underfunding, the Pension Benefit Guaranty Corporation (PBGC) estimates that it will be liable for about $176 million, according to a news release.
>On July 30, 2003, Pillowtex Corp. filed for bankruptcy protection and announced it would cease operations. The company has since closed its facilities, dismissed its workforce of almost 7,800 employees, and sold its property and brand names in liquidation
“The PBGC is stepping in to ensure that Pillowtex workers receive the benefits they have earned,” said PBGC Executive Director Steven Kandarian (See Steve Kandarian ). “Retirees will continue to receive their monthly benefit checks without interruption, up to guaranteed federal limits. Other employees will receive benefits when they are eligible to retire.”
>Once the PBGC becomes trustee of Pillowtex’s pension plans, retirees will continue to receive their monthly benefit checks without interruption, up to guaranteed federal limits. Other employees will receive benefits when they are eligible to retire. Federal guidelines call for workers in plans that terminate in 2002 is $3,664 a month (or $43,977 a year) for workers retiring at age 65. Maximum guarantees are adjusted for retirees older or younger than age 65 and for those who choose survivor benefits.
The PBGC, created by ERISA to guarantee private-sector pension benefits, currently backs pension benefits for about 44 million American workers and retirees participating in over 32,500 private sector defined benefit pension plans. The agency is financed by insurance premiums from covered companies and investment income.