The Pension Benefit Guaranty Corporation has assumed responsibility for the
pensions of 32,500 workers and retirees of Westpoint Stevens Corp., a bankrupt
textile manufacturer based in West Point, Georgia.
The pension plans of Westpoint Stevens's hourly and salaried workers ended
as of August 8, 2005, and the PBGC became trustee of the plans on August 18,
2005. The plans are 46 percent funded, with $260 million in total assets to
cover $566 million in benefit promises. The PBGC will be liable for $286 million
of the $306 million pension shortfall.
The PBGC says it will ensure that Westpoint Stevens workers and retirees covered
by the pension plans receive their benefits up to the limits set by law. Retirees
will continue to receive monthly benefit checks without interruption, and other
workers will receive benefits when they become eligible.
Under federal pension law, the maximum guaranteed pension at age 65 for participants
in plans that terminate in 2005 is $45,613 per year. The maximum guaranteed
amount is lower for those who retire earlier or elect survivor benefits. In
addition, certain early retirement subsidies and benefit increases made within
the past five years may not be fully guaranteed.
The PBGC is a federal corporation created under the Employee Retirement Income
Security Act of 1974. It currently guarantees payment of basic pension benefits
earned by 44 million American workers and retirees participating in over 31,000
private-sector defined benefit pension plans. The agency receives no funds from
general tax revenues. Operations are financed largely by insurance premiums
paid by companies that sponsor pension plans and by investment returns.