The Pension Benefit Guaranty Corporation (PBGC) and Sears Holdings Corp. have reached a final agreement that provides substantial protections for the Sears pension plan, which covers nearly 200,000 people.
A tentative arrangement was first announced in September 2015, the parties explain, “and after extensive talks, the agreement is now final.”
According to the agreement, Sears will continue to protect the assets of certain special purpose subsidiaries, which hold real estate and/or intellectual property assets. Additionally, the subsidiaries will “grant springing liens on the protected assets in favor of PBGC. The liens will be triggered only by failure to make required contributions to the plan, prohibited transfers of ownership interests in the subsidiaries, termination of the plan, or bankruptcy of the company or certain of its subsidiaries.”
While Sears is currently making required minimum contributions to its pension plan, the plan’s assets would not be sufficient to satisfy all benefits if it were to terminate.
“This represents what sponsors and PBGC can achieve when we work together for the benefit of current and future retirees,” says PBGC Director Tom Reeder. “We applaud Sears for working with us so closely on this issue.”