On January 5, 2009, The Pension Benefit Guaranty Corporation announced an agreement with Visteon Corp. to provide additional protection for the pension plan covering more than 5,300 former employees of the automotive supplier at now-shuttered facilities in Connersville and Bedford, Ind. Under the accord, Visteon will accelerate a $10.5 million cash contribution to the plan, provide a $15 million letter of credit, and provide for a guaranty by certain affiliates of certain contingent pension obligations of up to $30 million.
“The PBGC continually monitors corporate actions that affect pension plans, and seeks protections when appropriate,” said PBGC Director Charles E.F. Millard. “Today’s agreement significantly strengthens the financial health of this plan. We commend Visteon’s willingness to work with us to achieve an outcome that is favorable to its employees and retirees.”
The PBGC negotiated the agreement under federal pension law provisions that permit the agency to seek protection when a plant closing causes more than 20 percent of covered employees to lose their jobs. All active participants in the pension plan were separated from employment when, under its restructuring plan, Visteon ceased operations in Connersville in December, 2007, and in Bedford in June, 2008. Unlike pension plans that terminate and are assumed by the PBGC, the Visteon pension plan for its Connersville and Bedford employees remains ongoing and under the company’s control.
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 over 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.