PBGC Hoists Anchor Glass Pension on Board

September 3, 2002 (PLANSPONSOR.com) - In yet another sign of the softening economy, the federal government's pension insurer has picked up responsibility for the underfunded pension plan of the nation's third-largest maker of glass beverage containers.

The Pension Benefit Guaranty Corporation (PBGC) says it has taken over the pension plan of Anchor Glass Container, which covers more than 14,000 current and former employees and retirees of the company.  Anchor is emerging from Chapter 11 bankruptcy under a court-approved plan of reorganization, according to the PBGC.

Glass “Ceilings”

For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.

In its plan of reorganization, Anchor agreed to pay PBGC $20.75 million on the reorganization plan’s effective date, followed by an additional $100 million — $10 million a year over 10 years – to satisfy Anchor’s  statutory pension liability. 

Anchor also agreed to grant PBGC a warrant for the purchase of  5% of the common stock of the reorganized company. 

PBGC estimates the Anchor plan, with assets of $336 million and benefit liabilities of $555 million, is underfunded by $219 million.  The agency will take over the assets and use PBGC insurance funds to pay guaranteed benefits earned under the plan, which terminated as of July 31, 2002.
 
Based in Tampa, Florida, Anchor has operations in twelve states, mostly in the Northeast and Midwest.

Pension Pickups

The PBGC has been kept extraordinarily busy of late, picking up responsibility for a number of underfunded pension plans. 

Just last week the agency picked up the six underfunded plans of New Jersey-based Harvard Industries, an announcement that came on the heels of its pickup of the plans of another bankrupt employer, Riverdale, Illinois-based Acme Metals, Inc. and its 3,800 participants.

While the PBGC continues to enjoy a healthy, employer-paid premium surplus, the string of pension terminations is taking a toll.

Pensions Protected
 
Under federal pension law, the maximum pension guaranteed for workers in plans that terminated in 2002 is $3,579 a month (or $42,954 a year) for persons retiring at age 65. 

Maximum guarantees are adjusted for retirees older or younger than age 65 and for those who choose survivor benefits. Workers and retirees do not need to take any action, but those who have questions may contact the PBGC Customer Service Center toll-free at 1-800-400-7242. 

PBGC, created by ERISA, guarantees payment of basic pension benefits earned by more than 44 million American workers and retirees participating in over 35,000 private-sector defined benefit pension plans.

Operations are financed largely by insurance premiums paid by companies that sponsor pension plans and by PBGC’s investment returns.

Portman, Cardin Mull Advice Reform Proposal

August 15, 2001 (PLANSPONSOR.com) - Plan sponsors may find it easier to help participants obtain investment advice if pension reformers U.S. Representatives. Rob Portman (R-Ohio) and Ben Cardin (D-Maryland) have their way.

Among the possible proposals for a follow-up bill the two legislators expect to discuss after the August Congressional recess is legislation that would allow companies to pay for employees to get finance advice, Portman spokesman Jim Morrell told PLANSPONSOR.com.

Still unclear is whether that would mean visiting a financial planner or whether it could include purchase of advice computer software, he said.

For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.

Morrell said preliminary discussions have centered on companies offering the financial advice payment as part of a “cafeteria-style” benefits package, an approach currently barred.  

“Cafeteria-style” packages typically give employees a specific number of units which they can “spend” on an array of benefits including health, dental, vision, prescription drug, etc.

Not Done Yet

The notion of a “to do” pension reform list first surfaced publicly earlier this summer when Portman and Cardin told a Washington, D.C. conference that their recently enacted legislation was far from the end of their reform efforts (see Portman, Cardin Promise Pension Reform Follow-through ).

On the list, they told the conference, were proposals about participant education driven by the DC industry’s growth of participant-directed plans with long investment option lists.

Most of Portman and Cardin’s Comprehensive Retirement Security and Pension Reform Act was enacted into law as part of the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001 (H.R. 1836).

– Fred Schneyer         editors@plansponsor.com

For the history of the Portman/Cardin pension reforms, see http://www.plansponsor.com/content/news/opinions/cardinportmanfeature

«

Ad Blocker Detected

We have detected that you are using an ad blocker in your browser. For further access of our website, please disable your browser's ad blocker.