The Pension Benefit Guaranty Corp. has assumed responsibility for Grede Foundries Inc.’s underfunded pension plan. The plan covered over 4,800 former workers and retirees of Grede Foundries Inc., the Milwaukee-based ferrous foundry group that declared bankruptcy in June 2009.
Grede Foundries’ six plants were combined with Citation Corp. in February of this year to form a new company, Grede Holdings LLC. The Grede pension plan ceased in November 2009. The plan is 45% funded with $60.9 million in assets and $135.3 million in liabilities, and PBGC will be responsible for $69.7 million of the $74.4 million shortfall.
PBGC is a federal corporation that guarantees pension benefits to workers covered by underfunded, private-sector pension plans.
The PBGC explained that it took control of the Grede pension plan in June because the company sold substantially all of its assets in the bankruptcy process, and the new ownership group did not assume the plan. It said Grede retirees will continue to receive their monthly benefit payments without interruption, and other workers will receive their pensions when they become eligible to retire.
Plan participants will be notified by mail of the change in administrators.
The Pension Protection Act of 2006 provides that the maximum guaranteed pension the PBGC can pay is determined by the legal limits in force on the date of the plan sponsor's bankruptcy. Therefore, Grede pension plan participants are subject to the limits in effect on June 30, 2009, which set a maximum guaranteed amount of $54,000/year for a 65-year-old.
The corporation said the maximum guaranteed amount is lower for someone who retires earlier or elects survivor benefits. In addition, certain early-retirement subsidies and benefit increases made within the past five years may not be fully guaranteed.
PBGC Takes Over Grede Foundries Inc. Pension Plan
Former organizations retirees will receive benefits