WASHINGTON – A federal agency announced Tuesday that it has taken responsibility for two pension plans covering nearly 2,300 workers and retirees of Falcon Products Inc., a maker of institutional furniture.
One of the pension plans being taken over is for Falcon Products. The other is for the company's subsidiary, Shelby Williams Industries Inc., which makes chairs and other commercial furniture.
The Pension Benefit Guaranty Corp. said these two companies were among the subsidiaries of St. Louis-based Falcon Products that filed for bankruptcy protection in January of this year.
The PBGC, which insures private defined-benefit pension plans, said that a bankruptcy court has ruled that the companies met all the criteria under federal law to transfer their pension liabilities to the pension insurance program.
The PBGC estimates that together the two pension plans being taken over are 44 percent funded, with about $26 million in assets to cover nearly $59 million in benefit promises. The agency said it will be liable for $31.6 million of the $33 million shortfall.
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.
The pension takeovers come as Congress scrambles to advance legislation aimed at shoring up private pension plans. The Senate passed a far-reaching pension overhaul bill last week. The House is expected to vote soon on its own measure.
The Senate vote came one day after the PBGC said it was running a deficit of $22.8 billion. Bankrupt steel and airline companies that have transferred pension responsibilities to the PBGC have been a major factor in the agency's swollen debt.
Private analysts worry that a taxpayer-funded bailout could happen at some point if the private pension system isn't overhauled by Congress.
PBGC'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.