By Pension and Benefits Editorial Staff
The Pension Benefit Guaranty Corporation (PBGC) has announced that it will assume responsibility for Sears Holdings Corporation's two defined benefit plans, which cover about 90,000 people. Sears filed for Chapter 11 protection on October 15, 2018. The PBGC will take over the plans because Sears' continuation of the plans is no longer possible. The PBGC covers Sears' two pension plans under its Single-Employer Insurance Program.
“Our mission is to protect the retirement income of plan participants and their families,” said PBGC Director Tom Reeder. “When it's no longer possible for plan sponsors to maintain their pension plans, PBGC plays the crucial role of providing lifetime retirement income for the workers and retirees.”
The PBGC notes that it has worked with Sears for several years to improve funding for the company's plans. Benefit accruals under the plans have been frozen since 2005. The PBGC estimates that the Sears' plans are underfunded by $1.4 billion leaving them 64 percent funded. The PBGC is seeking to terminate the plans as of January 31, 2019. The Agency will become responsible for the pension plans when Sears agrees or a court orders plan termination. Until then, the plans remain the responsibility of Sears Holdings Corporation. The PBGC expects that its guarantees will cover the vast majority of pension benefits earned under these plans.
SOURCE: PBGC News Release No. 19-01.
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