The plan, which has 3,500 vested participants, is underfunded by $43 million, and will be terminated November 15, pending approval of the US Bankruptcy Court for the Middle District of Georgia.
Ron Divin, Tom’s president and CEO, said falling interest rates and an unsteady bond market contributed to the plan’s underfunding, according to the newspaper. The company sent a letter to employees this week informing them the board of directors had decided to terminate the pension plan and adopt a 401(k) plan instead. “I can assure you that the actions to terminate the Defined Benefit Plan are necessary for the survival and future of the Company,” the Ledger-Enquirer said Divin wrote in the letter.
A spokesman for the PBGC told the newspaper that they may meet with employees to discuss how benefits will be paid.
The Ledger-Enquirer also reports that a group of former participants has requested bankruptcy court approval for a committee to study the need for terminating the pension plan and the effect it will have on employees. The request has been resisted in court filings from bond-holders, debt-holders, the company, and the bankruptcy trustee involved in the case.