A news release from the Pension Benefit Guaranty Corporation (PBGC) said the agency stepped in because Tom’s Foods missed nearly $4.5 million in required pension contributions and the pension plan will be abandoned as a result of the sale of nearly all of the company’s assets.
According to PBGC estimates, the Tom’s Foods Pension Plan is about 51% funded, with about $44 million in assets to cover some $87 million in benefit liabilities. The PBGC expects to be responsible for substantially all of the $43 million shortfall.
The agency announcement said it will take over the assets and use PBGC insurance funds to pay guaranteed benefits earned under the plan, which terminated on October 21, 2005. The PBGC became trustee of the plan on June 28, 2007.
Tom’s Foods filed for Chapter 11 protection on April 6, 2005, in the U.S. Bankruptcy Court in Columbus. On Oct. 17, 2005, Tom’s Foods was purchased by Charlotte-based Lance Inc. for $40.2 million plus the assumption of certain liabilities. The transaction did not include the pension plan.
Under federal pension law, the maximum guaranteed pension at age 65 for participants in plans that terminate in 2005 is $45,614 per year.