Compliance June 10, 2010

PBGC Announces Pension Funding Agreement with Reynolds Packaging

June 10, 2010 (PLANSPONSOR.com) - The Pension Benefit Guaranty Corporation (PBGC) announced an agreement with Reynolds Packaging Group that strengthens a defined benefit plan covering more than 300 former workers at the company’s shuttered plant in Downingtown, Pennsylvania.
Reported by

Under the agreement, Reynolds Packaging will pay more than $5.3 million into the plan over the next four years – about $2.3 million in contributions above the required minimum will be made this year, and just over $1 million will go into the plan in each of the following three years. The company also agreed that it will not use the additional contributions as well as certain contributions made prior to the agreement to offset future funding requirements, according to the announcement.   

Reynolds Packaging made more than $1.8 million in excess contributions to the plan before it closed the Downingtown plant.   

Get more!  Sign up for PLANSPONSOR newsletters.

The agreement with the PBGC stems from the March 27, 2009, shutdown of the Downingtown plant where 114 workers lost their jobs. Unlike situations where the PBGC assumes responsibility for failed pension plans, the Reynolds Packaging Group Pension Plan for Hourly Employees of Downingtown Plant, has not failed and remains ongoing under the company’s sponsorship.   

PBGC noted that the Employee Retirement Income Security Act (ERISA) requires the agency to seek additional protection when more than 20% of a company’s employees covered by a pension plan lose their jobs due to a cessation of operations at a facility.

Benefits June 10, 2010

San Francisco Voters Approve Pension Changes

June 10, 2010 (PLANSPONSOR.com) – Voters in San Francisco approved a ballot measure that will reduce the city’s pension costs.
Reported by

Under the measure, the pension fund contribution rate will increase from 7.5%  to 9% for newly hired public safety workers, according to the San Francisco Examiner. Other workers will continue to pay a 7.5% contribution.  

In years when San Francisco’s contribution to the retirement fund is less than expected due to strong returns on investments, the city would put the difference into a special health care trust fund used to pay for retired health workers’ benefit costs.  

Get more!  Sign up for PLANSPONSOR newsletters.

The measure also requires retirement benefits calculations to be based on the average monthly salary of an employee’s last two years of service, instead of just the last year as currently.   

The measure could generate an estimated savings for the city between $300 million and $500 million, “depending on future wage and benefit rates for employees and other factors,” the City Controller’s Office said, according to the news report.  

The city will pay about $300 million in retirement benefits for city employees during this fiscal year and the amount is expected to increase to about $800 million by 2014, the news report said. The city has a $4 billion future cost for retiree health benefits. 

«