Government takes over Huffy's pension plan
Wednesday, October 5th 2005, 11:16 am
By: News On 6
WASHINGTON (AP) _ A federal agency announced Wednesday that is has taken responsibility for the pensions of 3,700 workers and retirees of Huffy Corp., a distributor of bicycles and sporting goods.
The Pension Benefit Guaranty Corp. said the company, which filed for Chapter 11 bankruptcy protection in October 2004, met all the criteria under federal law to transfer its pension liabilities to the pension insurance program.
The PBGC estimates that the company's pension plan is 47 percent funded, with $71.7 million in assets to cover $152.4 million in benefit promises. The agency said it will be liable for $80 million of the $80.7 million shortfall.
The agency does not guarantee the same benefit a company promises its workers. The maximum annual benefit for plans taken over in 2005 is $45,614 for workers who wait until 65 to retire. Workers who retire before 65 get smaller benefits.
Huffy is based in Miamisburg, Ohio.
The takeover of Huffy's pension obligations comes against the backdrop of mounting concern on Capitol Hill and elsewhere about the financial health of the PBGC.
The agency, which insures 31,000 private-sector pension plans covering 44 million employees, has seen its deficit soar to more than $23 billion last year, mainly due to takeovers of steel and airline industry plans.
Private analysts worry that a taxpayer-funded bailout could happen at some point if the agency cannot get on firmer financial footing.
Legislation is moving through Congress that aims to shore up the agency and to overhaul rules governing private pension plans.
The agency's operations are financed by insurance premiums, which are paid by companies that sponsor traditional pension plans. It also earns money from investments and receives funds from pension plans that it takes over. The agency is not funded through tax revenues.