US - Cooper Tire & Rubber Co. has reached an agreement with the Pension Benefit Guaranty Corporation that sees the company pouring US$39m into the retirement plan of employees at a shuttered plant, the PBGC said yesterday.
Cooper has agreed to make the contribution to the Spectrum Retirement Plan, which with the waiver of a $23m carryover balance it could have claimed from a previous overfunding, will strengthen the plan by $62m.
The move was triggered by Cooper's decision to close its plant at Albany, Ga., employing 1,300 workers.
Under the Employee Retirement Income Security Act, companies are obliged to make additional funding to pension plans if a plant closure means more than 20% of the workforce would lose their jobs. In total the Spectrum retirement plan covers 7,000 members.
PBGC acting director Vince Snowbarger welcomed the arrangement.
"When Cooper Tire planned to close their Albany facility, they approached us to negotiate suitable pension funding protections like those announced today," he said. "We appreciate Cooper's readiness to work with us to achieve a favorable outcome for their employees and retirees. The PBGC encourages other companies to contact us in advance of plant closing decisions to ensure timely agreement on funding arrangements."
Earlier this year Cooper Tire froze pension plans for US-based salaried employees from June 30, resulting in savings of $8m.
Curtis Schneekloth, a spokesman for Cooper Tire, said instead, employees were offered a matching 401k plan where the company matched 3.5% of contributions up to 6%.
Also yesterday, the PBGC said it would take over the underfunded pension plans of bankrupt auto-parts maker Proliance International. The Proliance schemes are 54% funded with assets of $20m to cover liabilities of $37m, the PBGC said.
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