Dec. 09--TUPELO -- After settling differences with Hancock Fabrics over the takeover of its pension plan, the Pension Benefit Guaranty Corporation is assuming responsibility for paying those pension benefits of nearly 4,200 people covered by the Hancock pension plan.
Currently, about 2,400 people are receiving benefits from Hancock, and they will get a payment from PBGC for December and January on or about Jan. 2.
Letters are scheduled to go out to all plan participants welcoming them to PBGC in a few days.
The agency noted that Hancock Fabrics paid benefits at the end of the month, while PBGC pays at the beginning of the month. This is why retirees are getting back-to-back payments. Going forward, retirees can expect their pension benefits from PBGC at the beginning of the month.
Hancock filed for Chapter 11 in February and liquidated its remaining stores on July 31. As of April 5, its pension plan was underfunded by $58.3 million.
Hancock's pension plan covers 4,149 people, including 2,286 retirees.
The former retailer had sought to modify a standard agreement terminating its pension plan and appointing the PBGC as the trustee of the plan. But the agency had argued any modifications were not acceptable, and the two sides settled their differences.
PBGC protects the pension benefits of nearly 40 million Americans in private-sector pension plans. The agency is currently responsible for the benefits of about 1.5 million people in failed pension plans. PBGC receives no taxpayer dollars; its operations are financed by insurance premiums, investment income and with assets and recoveries from failed single-employer plans.
The PBGC pays pension benefits up to the maximum guaranteed benefit set by law to those who retire at 65 ($60,136 as of this year). The payable amount to those who start receiving benefits other than at 65 have their benefits adjusted to be equivalent in value.
PBGC in fiscal year 2015 paid $5.6 billion in benefits to participants of failed single-employer pension plans. But the agency's deficit increased to $76 billion; it has a total of $164 billion in pension obligations it's picked up, with only $88 billion in assets.
The single-employer program in which Hancock Fabrics falls protects 30 million workers and retirees in 22,000 pension plans nationwide.
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