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Compliance July 24, 2008
PBGC Makes Deal with Metal Company to Reduce Risk
July 24, 2008 (PLANSPONSOR.com) - The Pension
Benefit Guaranty Corporation (PBGC) announced an agreement
with Norwegian-owned Elkem Metals Inc. that will shore up
funding for the pension plan of 1,600 workers and retirees by
$17.3 million and provide another $22 million if the PBGC
later takes over the plan.
Reported by Rebecca Moore
A PBGC news release said plant closures spurred the agency to obtain a cash infusion and other guarantees for the Elkem Metals Inc. Retirement Program Plan. By ceasing operations at two plants, Elkem incurred an obligation for the payment of $50.7 million in potential liabilities in the event of plan termination.
In addition to the $17.3 million payment beyond its required funding contributions and additional $22 million if the PBGC assumes responsibility for the plan at a later date, Elkem also agreed to waive the credit balance that would have allowed the company to make smaller contributions to the pension plan in the future.
Unlike instances in which the PBGC assumes responsibility for pension plans that can no longer pay benefits, Elkem’s retirement plan remains ongoing and under the company’s control, the announcement said. The company ceased operations at an Oklahoma calcium carbide plant in March, and at a West Virginia silicon metal facility in December 2005. The plants stopped operating following sales to buyers who did not assume liabilities of the company’s retirement plan.
The PBGC compared the deal to a similar negotiation with Electrolux last December (See PBGC Reaches Agreement with Electrolux to Protect Pensions ).