US - The Pension Benefit Guaranty Corporation (PBGC) and Swedish-owned Electrolux Home Products have reached a US$77.5m agreement to protect retirement benefits of more than 2,350 former employees.
In March 2006, Electrolux shut down its plant in Michigan which triggered action by PBGC to seek financial protection for the pension plan. Under ERISA - the federal pension law that created the PBGC - the PBGC is required to seek protection when more than 20% of a company's employees covered by a pension plan lose their jobs due to a plant closing.
Charles Millard, interim director, PBGC said: "The PBGC will continue to aggressively monitor business transactions that may jeopardise pension plans and arrange suitable protections, as we have done with Electrolux and earlier this year with Cerberus/DaimlerChrysler. We appreciate Electrolux's cooperation in working with us to devise a solution that is in the best interests of employees, retirees, and their families."
Electrolux sponsors eight pension plans. The agreement covers the Electrolux Pension Plan for Bargaining Employees at the Michigan plant. At the time of the Michigan plant closing, the plan was 81% funded with unfunded benefit liabilities of $77.5m as of March 2006.
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