The Pension Benefit Guaranty Corporation (PBGC) has assumed responsibility for the underfunded pension plan covering more than 8,700 employees of Reliance Insurance Company, the insolvent Philadelphia-based property/casualty insurer now being liquidated by the Pennsylvania Department of Insurance.
"PBGC is stepping in because the company is liquidating, and the pension plan will be unable to pay benefits when due," said PBGC Executive Director Steven A. Kandarian. "PBGC's insurance guarantee protects the basic pension benefits of Reliance employees. Retirees will continue to receive monthly checks subject to federal maximum guarantees, and the benefits of other employees will be kept safe until they reach retirement age."
The Reliance Insurance Company Employees Retirement Plan terminated on February 28, 2002. With assets of about $143 million to cover benefit liabilities totaling around $267 million, the Reliance plan is underfunded by about $124 million, according to PBGC estimates. PBGC will add its assets to those of the plan to make sure the guaranteed pension benefits of Reliance employees are paid. PBGC's action does not affect the Reliance Holding Group pension plan, which is ongoing.
Under federal pension law, the 2002 maximum guaranteed benefit for workers retiring at age 65 is $3,579.55 a month (or $42,954.60 a year). Maximum guarantees are adjusted for retirees older or younger than age 65 and for those who choose survivor benefits. PBGC estimates show most participants will receive their full benefit.
Workers and retirees do not need to take any action. Reliance pension plan participants who have questions about benefits or who wish to retire may contact PBGC's Customer Service Center 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 to be connected to 800-400-7242. Information pertaining to the Reliance pension plan may also be found on the Trusteed Plans Info section of the PBGC Web site.
PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974 to guarantee payment of basic pension benefits earned by more than 43 million American workers and retirees participating in nearly 38,000 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 PBGC's investment returns.
