News & Policy

WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced it has assumed responsibility for two underfunded pension plans covering over 1,300 former employees and retirees of bankrupt Meridian Automotive Systems Inc., a manufacturer of automobile and truck parts based in Grand Rapids, Mich.

The PBGC stepped in because the pension plans faced abandonment as the company, liquidating in bankruptcy, would leave no entity to finance or administer the plans. Retirees under the plans will continue to receive their monthly benefit payments without interruption, and other workers will receive their pensions when they are eligible to retire.

Together, the Pension Plan for Bargaining Unit Employees at Jackson, Ohio, and the Retirement Plan for Hourly-Rated Employees at Centralia, Ill., are 59 percent funded, with $18.1 million in assets and $30.7 million in benefit liabilities, according to PBGC estimates. The agency expects to cover the entire $12.6 million shortfall, and will take over the assets and use insurance funds to pay guaranteed benefits earned under the plans, which terminated as of August 7, 2009. The PBGC became trustee of the plans on April 27, 2010.

Within the next several weeks, the PBGC will send trusteeship notification letters to all plan participants. Under federal pension law, the maximum guaranteed pension at age 65 for participants in plans that terminate in 2009 is $54,000 per year. The maximum guaranteed amount is lower for those who retire earlier or elect survivor benefits.

Workers and retirees with questions may consult the PBGC Web site, www.pbgc.gov or call toll-free at 1-800-400-7242. TTY/TDD users should call the federal relay service toll-free at 1-800-877-8339 and ask for 800-400-7242.

Retirees of Meridian Automotive Systems who draw a benefit from the PBGC may be eligible for the federal Health Coverage Tax Credit. Further information may be found on the PBGC Web site at http://www.pbgc.gov/workers-retirees/benefits-information/content/page13692.html.

Assumption of the plans' unfunded liabilities will increase the PBGC's claims by $12.6 million and was not previously included in the agency's fiscal year 2009 financial statements.

The PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974. It currently guarantees payment of basic pension benefits earned by 44 million American workers and retirees participating in over 29,000 private-sector defined benefit pension plans. The agency receives no funds from general tax revenues. Operations are financed largely by insurance premiums paid by companies that sponsor pension plans and by investment returns.