The Greensboro, North Carolina-based manufacturer of denim and home furnishing fabrics’ pension has only $80 million in assets to cover $139 million in benefit promises. Of the $59 million in total underfunding, the nation’s private pension insurer estimates it will be liable for approximately $43 million, according to a news release.
“The PBGC is taking this action because Cone Mills is liquidating in bankruptcy and no asset purchaser has stepped forward to assume the pension plan,” PBGC Executive Director Steven Kandarian said in the release. The company’s assets will be sold at a court-approved auction on Thursday. Final approval of the sale is expected at a February 9 bankruptcy court hearing.
Should the PBGC become the trustee for the plan, retirees will continue to receive their monthly benefit checks without interruption up to guaranteed federal limits. Other employees will receive benefits when they are eligible to retire. Federal guidelines call for workers in plans that terminate in 2004 to receive $44,386 per year for workers retiring at age 65. Maximum guarantees are adjusted for retirees older or younger than age 65 and for those who choose survivor benefits.
The PBGC, created by the Employee Retirement Income Security Act (ERISA) to guarantee private-sector pension benefits, currently backs pension benefits for about 44 million American workers and retirees participating in over 31,000 private sector defined benefit pension plans. The agency is financed by insurance premiums from covered companies and investment income.
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