Under a settlement with the Pension Benefit Guaranty Corporation, Saint-Gobain Containers, Inc., has made $207.5 million of additional contributions to its pension plan.
The move helped shore up the plan’s financial standing and alleviates some of the PBGC’s concerns about the plan’s sponsor being sold to a company with fewer financial resources.
The settlement included Ardagh Group S.A., and Saint-Gobain Corp. The settlement ends ongoing litigation over the agency’s right to take control of the plan because of inadequate funding. The additional contributions improved the plan’s funding level to about 80 percent from 63 percent in 2013.
“It was clear to us that the proposed sale put the retirement benefits of nearly 13,000 people in jeopardy, so we moved quickly to get better funding for the plan. We had to threaten to take possession of it in order to get Saint-Gobain to act,” said Sanford Rich, PBGC's chief of negotiations and restructuring. “Now, because of PBGC’s actions, we have a better funded plan and 13,000 people have a more secure retirement.”
In April 2013, PBGC moved to terminate the plan sponsored by Saint-Gobain Containers (also known as Verallia North America) after the company turned down numerous requests to improve funding levels. The agency took this action following a January 2013 agreement by the parent company to sell the Muncie, Ind.-based container maker for $1.7 billion to a unit of Ardagh, a Luxembourg-based glass and metal packaging company.
PBGC pressed the parties for better funding because the sale put retirement benefits at risk by moving the plan from a financially strong sponsor to Ardagh, which carries a high level of debt.
When the parties declined to provide financial protection for the plan, PBGC took steps to terminate the plan to protect retirement benefits.
PBGC protects the pension benefits of more than 42 million Americans in private-sector pension plans. The agency is directly responsible for paying the benefits of more than 1.5 million people in failed pension plans.