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PBGC Blog: Retirement Matters

In coming years, more than half of workers and retirees in terminated multiemployer plans will face a reduction in benefits under current PBGC guarantees if their plans run out of money, according to PBGC's Multiemployer Guarantee study (PDF) released earlier today.

This study takes a closer look at how the guarantee limits will impact the pension income of workers and retirees in multiemployer plans that will receive financial assistance from PBGC.

In the past, only about 20 percent of workers and retirees saw a reduction in their benefit - typically that loss represented about 10 percent of their promised benefit. This study finds that these losses are both likely to apply to more people and likely to be larger in percentage terms as more multiemployer plans run out of money and require financial assistance from the agency.

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PBGC to Pay Benefits at Hovensa

  |   February 4, 2015

PBGC will pay retirement benefits for more than 1,600 current and future retirees at Hovensa LLC, which owns an oil refinery and oil storage terminal in the U.S. Virgin Islands.

The agency is stepping in because Hovensa plans to close its operations and the pension plan will be abandoned. The Hovensa Employees' Pension Plan will end as of Feb. 4, 2015.

PBGC will pay all pension benefits earned by the plan's retirees up to the legal limit of $60,136 a year for a 65-year-old.

Retirees will continue to get benefits without interruption, and future retirees can apply for benefits as soon as they are eligible.

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PBGC: A Year in Review

  |   November 18, 2014

With members of Congress, President Gerald R. Ford signed the Employee Retirement Income Security Act(ERISA) of 1974 on Monday, September 2, 1974. ERISA established the Pension Benefit Guaranty Corporation.

On Sept. 2, PBGC celebrated its 40th year of protecting pensions. And yesterday, PBGC released its FY 2014 Annual Report, highlighting the agency's accomplishments and areas for improvement. The review period covers Oct. 1, 2013 through Sept. 30, 2014.

PBGC's deficit increased to $62 billion in FY 2014, up from $36 billion the year before. The deficit increase is largely driven by the declining financial condition of a few multiemployer plans. The deficit in the multiemployer program grew to $42.4 billion, compared with $8.3 billion last year.  This increase is largely due to the fact that several additional multiemployer plans are now expected to run out of money within the next decade. But the single-employer program's deficit saw an improvement and dropped to $19.3 billion, down from $27.4 billion in 2013.

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PBGC will pay retirement benefits for nearly 1,400 current and future retirees at White Rose Inc., an independent food wholesaler based in Carteret, N.J.

The agency is stepping in because White Rose plans to sell its assets in bankruptcy and the pension plan will be abandoned. The company's plan, Third Amended and Restated Di Giorgio Retirement Plan, will end as of Oct. 27, 2014.

PBGC will pay all pension benefits earned by the plan's retirees up to the legal limit of about $59,320 a year for a 65-year-old.

Retirees will continue to get benefits without interruption, and future retirees can apply for benefits as soon as they are eligible.

Employees and retirees who are participants in White Rose's plan will continue to receive benefits from the company until PBGC assumes responsibility.

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ReichholdPBGC will pay retirement benefits for more than 4,500 current and future retirees at Reichhold Inc., a manufacturer of resins used for composites, based in Durham, N.C.

The agency is stepping in because the company plans to sell its assets in bankruptcy and the pension plan will be abandoned. The Reichhold Inc. Retirement Plan will end as of Oct. 17, 2014.

PBGC will pay all pension benefits earned by the plan's retirees up to the legal limit of about $59,320 a year for a 65-year-old.

Retirees will continue to get benefits without interruption, and future retirees can apply for benefits as soon as they are eligible.

Employees and retirees who are participants in the Reichhold plan will continue to receive benefits from the company until PBGC assumes responsibility.

According to PBGC estimates, the plan is 70 percent funded with $228 million in assets to pay $325 million in benefit liabilities. The agency is expected to cover $90 million of the $97 million shortfall.

On Sept. 30, 2014, Reichhold and three of its affiliates sought Chapter 11 protection in the U.S. Bankruptcy Court in Wilmington, Del. The company said in court papers that financiers Third Avenue Management, Black Diamond Capital Management, and J.P. Morgan Chase, which hold Reichhold's senior secured notes, intend to be the lead bidders for Reichhold's assets. An auction, sale hearing, and closing are slated for Dec. 19, 2014; Dec. 22, 2014; and January 30, 2015, respectively.

Hispanic Heritage Month

Each year, on September 15, we celebrate the start of National Hispanic Heritage Month. During this celebration, which runs through October 15, we recognize the significant impact Hispanic and Latino Americans have had on American history. We celebrate their rich culture and countless achievements. And this year's theme, "Hispanics: A legacy of history, a present of action and a future of success," reminds us of their profound impact on American culture. 

In his proclamation, President Obama said our Nation is strengthened when we lift up the Hispanic community. He also said when we create more ladders of opportunity, we provide hope for all Americans to reach their greatest potential.

But when looking at retirement preparedness, Hispanic Americans are often lower on the ladder than the general population.

Although many Americans face difficulty planning for retirement, Hispanic Americans face unique challenges that other minority groups do not. Hispanic Americans typically have less access to employer-provided benefits and contribute less on their own. The reason? Greater emphasis is usually placed on short-term financial security, such as eliminating debt. Saving for retirement is simply not a short-term priority.

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