PBGC Seizes Michigan Retailer's Plan

September 26, 2002 (PLANSPONSOR.com) - The Pension Benefit Guaranty Corporation (PBGC) is taking over the pension plan of a bankrupt Jackson, Michigan-based clothing store chain.

The agency said the move affects a plan covering about 5,400 workers and retirees of Jacobson Stores Inc. The agency estimated the plan is underfunded by about $20 million with about $55 million in assets and $75 million in liabilities.

The PBGC said it is stepping in because Jacobson is liquidating its operations in bankruptcy court and terminating its pension plan as of September 30.

Within the next several weeks, PBGC said it will send a trusteeship notification letter to all Jacobson Stores workers and retirees.   After the transfer of plan records, the agency will review individual records and calculate each person’s benefit according to plan provisions and federal limits.

Under federal pension law, the maximum pension guaranteed for workers in plans that terminate in 2002 is $3,579.55 a month (or $42,954.60 a year) for persons retiring at age 65. Maximum guarantees are adjusted for those who retire at ages younger or older than 65 or those who elect survivor benefits.  

Information about the Jacobson Stores pension plan is available at the PBGC Web site, www.pbgc.gov/jacobson.   Workers and retirees with additional questions may contact PBGC’s Customer Service Center toll-free at 1-800-400-7242.

PBGC is a federal corporation created under ERISA, which 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.

Agency operations are funded largely by insurance premiums paid by covered companies as well as the PBGC’s investment returns.

Jacobson had operations in Florida, Indiana, Kansas, Kentucky, Michigan and Ohio.