PBGC said it had made numerous efforts to engage German-owned Bendix on the matter. The lawsuit got their attention.
The Pension Benefit Guaranty Corporation has reached a settlement with Bendix Commercial Vehicle Systems LLC, which ends a $16.6 million Federal lawsuit over pension debt incurred from the company’s plant closing in Frankfort, Ky. The action against German-owned Bendix was the first time PBGC has had to go to court to compel a company to cover pension obligations from a plant closing.
Critics of the federal agency say it has been lax and ineffective in protecting pensions. Under today’s settlement, PBGC won’t require Bendix to put up collateral for the remaining $8.4 million in pension liability, provided the company remains financially strong until the end of the year.
Federal law imposes liability when more than 20% of a pension plan’s members lose their jobs in a shutdown. All of Bendix’s 63 Frankfort plant workers were jobless after it closed in December 2007 when Bendix moved its braking system compressor operation to Acuña, Mexico. Bendix only notified the agency about the plant closure on 30 January 2008. Bendix supplies brakes and vehicle control systems for trucks and commercial vehicles and is headquartered in Elyria, Ohio, but owned by Knorr-Bremse AG of Munich, Germany.
“Plan sponsors have for years asked us to pay attention to whether company actions really put their pensions at risk, and now we’re doing so,” PBC Director of Communications J. Jioni Palmer said. “When companies show the commitment and ability to protect their workers and retirees, we are now working with them to recognize that.”
Since the plant closing, Bendix has made $8.2 million in funding contributions beyond its normal requirements, which improved – but did not fix the financial status of the pension plan. If the company’s financial position significantly weakens during that time, PBGC says Bendix will provide a letter of credit for $8.4 million.
