The Pension Benefit Guaranty Corporation (PBGC) says it has taken over the pension plan of Anchor Glass Container, which covers more than 14,000 current and former employees and retirees of the company. Anchor is emerging from Chapter 11 bankruptcy under a court-approved plan of reorganization, according to the PBGC.
In its plan of reorganization, Anchor agreed to pay PBGC $20.75 million on the reorganization plan’s effective date, followed by an additional $100 million — $10 million a year over 10 years – to satisfy Anchor’s statutory pension liability.
Anchor also agreed to grant PBGC a warrant for the purchase of 5% of the common stock of the reorganized company.
PBGC estimates the Anchor plan, with assets of $336
million and benefit liabilities of $555 million, is
underfunded by $219 million. The agency will take
over the assets and use PBGC insurance funds to pay
guaranteed benefits earned under the plan, which terminated
as of July 31, 2002.
Based in Tampa, Florida, Anchor has operations in twelve states, mostly in the Northeast and Midwest.
The PBGC has been kept extraordinarily busy of late, picking up responsibility for a number of underfunded pension plans.
Just last week the agency picked up the six underfunded plans of New Jersey-based Harvard Industries, an announcement that came on the heels of its pickup of the plans of another bankrupt employer, Riverdale, Illinois-based Acme Metals, Inc. and its 3,800 participants.
While the PBGC continues to enjoy a healthy, employer-paid premium surplus, the string of pension terminations is taking a toll.
Under federal pension law, the maximum pension guaranteed for workers in plans that terminated in 2002 is $3,579 a month (or $42,954 a year) for persons retiring at age 65.
Maximum guarantees are adjusted for retirees older or younger than age 65 and for those who choose survivor benefits. Workers and retirees do not need to take any action, but those who have questions may contact the PBGC Customer Service Center toll-free at 1-800-400-7242.
PBGC, created by ERISA, guarantees payment of basic pension benefits earned by more than 44 million American workers and retirees participating in over 35,000 private-sector defined benefit pension plans.
Operations are financed largely by insurance premiums paid by companies that sponsor pension plans and by PBGC’s investment returns.