PBGC Takes Wheel Maker DB Plan
November 30, 2009 (PLANSPONSOR.com) – The nation’s private-sector pension insurer on Monday announced plans to take over a 54%-funded pension plan for a bankrupt Michigan wheel manufacturer.
A news release from the Pension Benefit Guaranty Corporation (PBGC) said The Hayes Lemmerz International, Inc. Retirement Income Plan covers more than 4,780 workers and retirees of Hayes Lemmerz International, Inc., based in Northville, Michigan.
The pension agency said it is taking over the plan because the company did not satisfy minimum funding mandates and cannot afford to both successfully come out of bankruptcy and provide necessary assets to the pension program. The PBGC said the plan could likely be abandoned if the firm’s bankruptcy reorganization is not successful.
The plan has assets of $110.4 million to cover benefit liabilities of $204.8 million, according to PBGC estimates. The agency expects to be responsible for $93.7 million of the $94.4-million shortfall. The plan was frozen on December 31, 2004.
The PBGC will take over the assets and use insurance funds to pay guaranteed benefits earned under the plan, which ended on November 30, 2009.
Under federal pension law, the maximum guaranteed pension at age 65 for participants in plans that terminate in 2009 is $54,000 per year. The company filed for bankruptcy protection in May 2009.