PBGC Seizes Plan from Bankrupt Va. Firm

May 11, 2009 (PLANSPONSOR.com) - The nation's private-sector pension insurer has moved to assume responsibility for the underfunded pension plan covering 9,600 employees and retirees of LandAmerica Financial Group Inc.

The Pension Benefit Guaranty Corporation (PBGC) said it opted to make the move regarding the plan of the bankrupt Glen Allen, Virginia, real estate services firm before a May 14 bankruptcy court hearing on the sale of stock in LandAmerica because, by law, the company’s subsidiaries remain liable for the plan’s unfunded benefit liabilities.

Under the Employee Income Retirement Security Act of 1974 (ERISA), the agency is permitted to collect claims from members of a plan sponsor’s controlled group, such as the subsidiaries of LandAmerica that may be sold this week. The PBGC said such entities are directly or indirectly 80%-owned by their parent company.

The LandAmerica Cash Balance Plan is 85% funded, with assets of $210 million and benefit liabilities of $246 million, according to PBGC estimates. The agency expects to cover the entire $36-million shortfall. The plan was frozen as of March 16, 2005.

The PBGC will take over the assets and use insurance funds to pay guaranteed benefits earned under the plan, which ends as of Monday.