PBGC takes on Chardon Rubber pensions

ERJ staff report (DS)

Washington DC -- The US-based Pension Benefit Guaranty Corporation (PBGC) has assumed responsibility for the underfunded pension plan covering more than 840 former workers and retirees of Chardon Rubber Co., a designer and manufacturer of rubber and plastic components based in Chardon, Ohio.

The PBGC stepped in because Chardon Rubber has sold substantially all of its assets in bankruptcy proceedings and there will be no sponsor left to fund or administer the plan. Retirees will continue to receive their monthly benefit payments without interruption, and other workers will receive their pensions when they are eligible to retire.

According to PBGC estimates, the Chardon Rubber Company Retirement Plan is 57 percent funded, with assets of $16.8 million to cover $29.5 million in benefit liabilities. The PBGC expects to be responsible for $12.4 million of the $12.7 million shortfall.

Within the next several weeks, the PBGC will send notification letters to all participants in the Chardon Rubber plan. Under provisions of the Pension Protection Act of 2006, 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 participants in the plan are subject to the limits in effect when Chardon Rubber filed for bankruptcy protection on May 15, 2009, which set a maximum guaranteed amount of $54,000 per year for a 65-year-old.

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Press release from PBGC