US picks up food maker's pension plan
WASHINGTON --A federal agency took over pension payments Monday for nearly 3,000 workers and retirees of bankrupt snack food manufacturer Tom's Foods.
The Pension Benefit Guaranty Corp., which insures private defined-benefit pension plans, estimated that the company's pension plan has assets of about $44 million to cover promised benefits totaling $87 million. The agency said it expects to be responsible for most of the shortfall.
Tom's Foods of Columbus, Ga., filed for Chapter 11 protection under the U.S. bankruptcy laws in April 2005, PBGC said. The company was purchased by Charlotte-based Lance Inc. six months later. That acquisition did not include Tom's Foods pension plan.
The PBGC said it stepped in because "Tom's Foods missed nearly $4.5 million in required pension contributions and the pension plan will be abandoned as a result of the sale of substantially all of the company's assets."
With PBGC's intervention, retirees and beneficiaries will continue to receive their monthly benefit checks without interruption, and other participants will receive pensions when they reach retirement age.
For those pension participants, the maximum annual benefit is $45,614 for workers who wait until 65 to retire. That is the maximum benefit for plans that terminated in 2005, as was the case with Tom's Foods.
The agency said that assumption of the pension plan "will have no material effect" on the agency's financial statements.
The PBGC reduced its deficit to $18.1 billion last year, an improvement from a shortfall of $22.8 billion recorded in 2005.
A 2006 pension law helped the agency improve its balance sheet. The law aims to shore up funding for traditional pensions, also known as defined-benefit pension plans.
The PBGC had seen its debt swell as bankrupt steel and airline companies dumped their pension responsibilities onto the agency.
The agency's operations are financed by insurance premiums paid by companies that sponsor traditional pension plans. It also earns money from investments and receives funds from pension plans it takes over. The agency is not funded through tax revenues.
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