Federal agency takes over Foundry retirement plan

A federal agency will take over the retirement plan for nearly 2,500 former and current employees of Lynchburg Foundry and two other foundries in Virginia because their parent company cannot afford to pay the benefits in the plan.

Because of the change, some of the retirees covered by the pension plan might have a reduction in their benefits, and current employees will not be able to accrue additional benefits, according to a spokesman for the agency.

However, retirees will continue to receive their pension checks as scheduled.

“Initially they won’t notice any change,” said Gary Pastorius, spokesman for the Pension Benefit Guaranty Corporation. “That’s our first priority, to make sure there is no interruption.”

A pension plan is a retirement plan controlled by a company for its employees. The company puts money into the plan and invests it pay benefits to retired workers.

If a company does not have the money to pay for those benefits, the PBGC steps in and takes over the plan.

On Friday PBGC announced that it would take responsibility for four pension plans belonging to Texas-based Intermet Corp.

Intermet used to employ more than 1,200 people in the Lynchburg area, before it shut down Lynchburg Foundry on the Lynchburg riverfront in 1994. It still owns Archer Creek Foundry in Campbell County and New River Foundry in Radford.

Last August Intermet filed for Chapter 11 bankruptcy because the automobile industry was slicing production and not buying as many of Intermet’s heavy iron castings.

After the bankruptcy filing PBGC entered discussions with Intermet to decide the best way to make sure the benefits of the pension plan would be honored.

Pastorius said Intermet failed to make a total of $7 million in payments to the four pension plans that PBGC is taking over.

“Intermet is in bankruptcy … and they won’t be able to come out of bankruptcy if they continue to have these financial obligations of the pension plans,” Pastorius said.

Most of Intermet’s pension plans taken over by PBGC have only about half as much money as they have commitments to pay benefits, according to Pastorius.

The funding shortfall could be caused by a pension plan’s investments losing value, he said.

The Lynchburg Foundry LLC Retirement Plan for Hourly Employees, which covers retirees and employees from Intermet’s Lynchburg-area foundries and the Radford foundry, has $29 million in assets but has obligations of $58.6 million.

Pastorius said that PBGC would cover the entire funding gap except $2.1 million.

Some retirees under the plan could see their payments go down. Benefits will be capped at $51,750 - a limit established by Congress.

The change in pension plan control also affects current employees. They will not be able to accrue more benefits than they have already earned, though they will be able to receive those benefits once they qualify for retirement, Pastorius said.

Pastorius said the Lynchburg Foundry retirement plan covers 1,298 retirees, 327 active employees, and 852 former employees who do not qualify for retirement yet.

The other three Intermet pension plans being taken by PBGC cover workers and retirees from Intermet’s sites in Columbus, Ga., Racine, Wis., and Decatur, Il., according to a PBGC news release.

Intermet will keep control of two smaller pension plans that it can afford to support, Pastorius said.

Officials at Intermet’s corporate offices in Fort Worth, Texas, could not be reached Monday evening. The public relations firm that Intermet lists as its media contact does not represent Intermet any more, according to an associate with the firm.