Benefits August 26, 2005

Tom's Foods Terminating Pension Plan

August 26, 2005 (PLANSPONSOR.com) - Tom's Foods, currently in bankruptcy court, has filed an application with the Pension Benefit Guaranty Corporation to stop benefit accruals for its pension plan by October 7, according to the Columbus, Ohio Ledger-Enquirer newspaper.
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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.

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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.

Benefits August 25, 2005

Report: Greater Employee Participation in Employer-Paid Benefits

August 25, 2005 (PLANSPONSOR.com) - In its National Compensation Survey on Employee Benefits in Private Industry in the US as of March 2005, the DoL's Bureau of Labor Statistics (BLS) points out that participation rates are higher for benefits that are paid for by the employer.
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The BLS survey found that nearly all employees with access to defined benefit pension plans, life insurance plans, and disability benefit plans participated in these employer-paid benefit plans. While 70% of workers had access to medical plans, only 53% participated. Fifty three percent of workers surveyed had access to a defined contribution plan, but only 42% participated.

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The BLS also found that participation in non-employer-paid benefits varied according to the employees’ earnings. Seventy six percent of white collar workers with access to medical benefit plans participated in those plans, while 61% of service workers participated in medical plans offered them. Similarly, 85% of workers earning $15 an hour or more participated in a defined contribution plan and 70% of those earning under $15 an hour participated in their defined contribution plan.

Other key findings in the BLS survey include:

  • 21% of employees participated in defined benefit retirement plans and 42% participated in defined contribution retirement plans.
  • Paid leave was the most commonly provided employee benefit in the private sector – 77% of employees were offered paid holidays and vacations, 69% were offered paid jury duty leave, and 48% were offered paid military leave.
  • 63% of private firms offered health insurance benefits and about 50% offered at least one type of retirement plan.
  • Employee contributions toward medical coverage averaged $273.03 per month for family plans and $68.96 per month for single coverage.
  • 52% of employees had access to life insurance plans and 49% participated.
  • Short-term and long-term disability benefits were offered to 40% and 30% of employees, respectively, and nearly all participated.

The complete report of survey results can be found here .

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