PBGC Reaches Agreement with Electrolux to Protect Pensions

December 13, 2007 (PLANSPONSOR.com) - The Pension Benefit Guaranty Corporation (PBGC) announced it has reached a $77.5 million agreement with Swedish-owned Electrolux Home Products Inc. to protect the defined benefit pension benefits of more than 2,350 former employees.

Under the agreement, Electrolux agreed to waive an existing $42.5 million credit balance in its pension fund that would have excused Electrolux from making further pension contributions up to that amount, the PBGC announcement said. The agreement also calls for Electrolux to make $35 million in additional contributions to the pension fund over the next five years. 

The agreement covers the Electrolux Pension Plan for Bargaining Employees at its Greenville, Michigan, plant. At the time of the March 2006 Greenville plant closing, the plan was 81% funded with unfunded benefit liabilities of $77.5 million, PBGC said.

The Employee Retirement Income Security Act (ERISA) requires the PBGC to seek protection when more than 20% of a company’s employees covered by a pension plan lose their jobs due to a plant closing. 

“Once again the PBGC has been able to use the statutory tools at its disposal to protect the retirement benefits of American pensioners,” said PBGC Interim Director Charles E.F. Millard, in the announcement. “We appreciate  Electrolux’s cooperation in working with us to devise a solution that is in the best interests of employees, retirees, and their families.”