Washington — A federal agency has assumed control of Circuit City’s pension plan.
The Pension Guaranty Corp. (PBGC), a national pension insurance program, became trustee of the plan yesterday.
The plan, which officially ended on March 31, covers more than 21,000 former employees, but will be abandoned after the bankrupt retailer’s assets are completely liquidated.
The plan is also underfunded by about 12 percent, although the PBGC said it will make up most of the $64 million shortfall.
The agency said it will take control of the plan’s $285 million in assets and use insurance funds to pay guaranteed benefits. Retirees and beneficiaries will continue to receive their monthly benefit checks without interruption, and other participants will receive their pensions when they are eligible to retire.
Under provisions of the Pension Protection Act of 2006, the maximum guaranteed annual payout for a 65-year-old Circuit City retiree is $51,750, based on the legal limits in effect on Nov. 10, 2008, the date of company’s bankruptcy filing
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 more than 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.