PBGC Takes Auto Parts Firm’s Plans

May 5, 2010 (PLANSPONSOR.com) – The Pension Benefit Guaranty Corporation (PBGC) has assumed responsibility for two underfunded pension plans covering more than 1,300 former employees and retirees of bankrupt Meridian Automotive Systems Inc., a manufacturer of automobile and truck parts based in Grand Rapids, Michigan. 

A news release said the PBGC stepped in because the pension plans faced abandonment as the company, liquidating in bankruptcy, would leave no entity to finance or administer the plans.. 

Together, the Pension Plan for Bargaining Unit Employees at Jackson, Ohio, and the Retirement Plan for Hourly-Rated Employees at Centralia, Illinois, are 59% funded, with $18.1 million in assets and $30.7 million in benefit liabilities, according to PBGC estimates.

The agency expects to cover the entire $12.6-million shortfall, and will take over the assets and use insurance funds to pay guaranteed benefits earned under the plans, which terminated as of August 7, 2009. The PBGC became trustee of the plans on April 27, 2010.

Assumption of the plans’ unfunded liabilities will increase the PBGC’s claims by $12.6 million and was not previously included in the agency’s fiscal year 2009 financial statements.