The Pension Benefit Guaranty Corp. announced it would pay all benefits owed to retirees of a Pennsylvania animal feed mill that sold its assets during bankruptcy proceedings.
The PBGC, the government agency that provides pension plan insurance, stepped in to ensure that 580 current and future retirees of Pennfield Corp. of Lancaster, Pa., would receive payments.
Pennfield’s pension was $13 million short of the $28 million it needed to pay full benefits. The agency said it expected to cover the entire shortfall. According to the PBGC, benefits to current retirees will continue without interruption. It added that others would be able to apply for benefits when they become eligible.
Cargill Inc., based in Minneapolis, purchased Pennfield’s assets, but did not assume its pension liabilities. Cargill, an international producer and marketer of food, agricultural, financial and industrial products and services, has 142,000 employees worldwide and last year had $136.7 billion in sales and other revenues.
Pennfield — which opened in 1919 — produced, processed and marketed high-end animal feeds. Its products were sold in Pennsylvania and Southern California.
The company filed for bankruptcy in October 2012 after losses of more than $3 million for each of three consecutive years. At the time it had 112 employees, down from a peak of more 800 in its heyday.
Some has called the premiums collected from companies by the PBGC inadequate and a recent report called into question the assumptions the agency makes in assessing its future needs.
The PBGC was established in 1974 as part of the Employee Retirement Income Security Act. In 2012, the agency collected $2.6 billion in premiums, but paid out $5.8 billion. It had $82 billion is assets and projected future liabilities at $105 billion.