Federal agency to take over Columbus Foundry pensions

Mar 14, 2009 (Columbus Ledger-Enquirer - McClatchy-Tribune Information Services via COMTEX) -- INMTQ | Quote | Chart | News | PowerRating -- A federal agency is taking over the pension plan of nearly 600 retirees and employees with Columbus Foundry.

The Pension Benefit Guaranty Corp. said Friday the local workers are among 4,500 retired, former and current employees of Intermet Corp. -- which owns the plant -- who will be transferred to the federal program on April 1.

"We don't even have the plan records yet," said PBGC spokesman Gary Pastorius. "So our actuaries haven't really figured out how many people will experience a cut" in pension pay.

But initial estimates indicate the Columbus workers should receive most of their retirement money.

There are 588 people enrolled in the pension plan in Columbus. That includes 66 full retirees, 252 former employees not retired and 270 active workers.

Intermet, working through bankruptcy reorganization, has funded $6.6 million of the local plan. Its expected payout, or liabilities, total $12.7 million.

That leaves a $6.1 million gap, with PBGC projecting it will cover all but $200,000 of that, Pastorius said.

Management with Fort Worth, Texas-based Intermet declined comment Friday.

Troy Jonas, a group president with the firm, would only confirm that Columbus Foundry is operating.

"It is," he said. "I just don't have any other comment to offer you."

Staffers at the plant, declining to be identified, said it is not operating at full capacity.

The 350,000-square-foot facility is located at 1600 Northside Industrial Blvd., just south of the Bradley Park Drive shopping area.

The factory, which employed more than 1,100 people a decade ago, forges ferrous metal into auto parts. The firm's Web site lists customers ranging from Honda, Toyota and Nissan to Ford, General M and Chrysler.

The auto industry, however, has experienced a sharp drop in sales in the past year as the economy entered a deep recession and lenders tightened credit. The automakers, in response, have cut back on manufacturing.

Aside from the Columbus Foundry, Intermet factories in Decatur, Ill., Racine, Wis., Lynchburg, Va., and Radford, Va., are impacted.

There are four pension plans affected by the move, including the one in Columbus. PBGC estimates they have $62 million in combined assets, with liabilities of $126 million. The agency estimates it will cover all but $2 million of that total shortfall.

The federal corporation stepped in after Intermet failed to pay more than $7 million in legally required pension contributions in recent months, the PBGC said.

Intermet, founded in 1846, has filed for Chapter 11 bankruptcy protection twice since 2004. Its last filing came in August 2008.

Pastorius said the takeover of the pension plans does not necessarily mean Intermet is going out of business. It's about survival, he said.

"It doesn't mean liquidation," he said. "In this instance, it would be very difficult for the company to reorganize successfully if it kept the pension plans."

PBGC estimates it is now handling more than $60 billion in unfunded pension benefit liabilities for the automobile industry as a whole.

The agency said it will notify Intermet pension plan participants via letter within the next few weeks.

Later, face-to-face meetings will be held with workers and retirees to explain the program.

Anyone currently receiving monthly pension checks will continue to receive them, Pastorius said. There will be no disruption.

"That's priority number one when we take over a plan is to check the account that has been paying those people to make sure there's enough in there to keep the checks going," he said. "In about six months or so, the only change they'll see is where the check's coming from. It will start coming from our bank rather than the bank that the plan used."

ABOUT THE AGENCY

The Pension Benefit Guaranty Corp. (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 more 29,000 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. THE PAYOUT

As of Sept. 30, 2008, the Pension Benefit Guaranty Corp. held total assets of nearly $63 billion. Its liabilities, or pension payment obligations, totaled $74 billion -- an $11 billion gap.

But the agency is not in danger of running out of money anytime soon. That's because it paid out only $4.3 billion in pension benefits in 2008, of which $1.5 billion was funded through 2008 contributions by companies.

"So you can see that the benefit payments take a bite out of our assets," said PBGC spokesman Gary Pastorius. "But it will take many years and many bites to consume that ... So on a cash flow basis, we're in good shape."

MORE INFORMATION

Workers and retirees with questions may consult the PBGC Web site, www.pbgc.gov or call toll-free at 1-800-400-7242. For TTY/TDD users, call the federal relay service toll-free at 1-800-877-8339 and ask for 800-400-7242.

Retirees of Intermet Corp. who draw a benefit from the PBGC may be eligible for the federal Health Coverage Tax Credit. Further information may be found on the PBGC Web site at http://www.pbgc.gov/workers-retirees/benefits-information/content/page13692.html.

To see more of the Columbus Ledger-Enquirer, or to subscribe to the newspaper,
go to http://www.ledger-enquirer.com. Copyright (c) 2009, Columbus
Ledger-Enquirer, Ga. Distributed by McClatchy-Tribune Information Services. For
reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or
847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group
Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

More News:   Market Updates | Stock Alerts | All Trading News | Stock Index