PBGC Takes over Auto Parts Maker's Plan

May 26, 2009 (PLANSPONSOR.com) - The Pension Benefit Guaranty Corporation (PBGC) announced it will take responsibility for the underfunded pension plan covering 532 workers and retirees of Contech US LLC, an auto parts maker based in Portage, Michigan.

The agency said its action comes during Contech’s bankruptcy proceeding, in which the company is liquidating through sales of its divisions and subsidiaries to third-party purchasers.  The buyers have not agreed to assume the retirement plan, so the pension plan will be without a sponsor at the conclusion of the proceedings, according to the announcement.

The PBGC estimates the Contech US LLC Pension Plan No. 203 is 38% funded, with assets of $8.4 million to cover benefit liabilities of $22 million. The agency expects to cover $12 million of the $13.6-million shortfall.

The plan was frozen on December 31, 2007. The agency said it will take over the assets and use insurance funds to pay guaranteed benefits earned under the plan, which ends on Tuesday.