Pensions when company bought out

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Pensions when company bought out

Postby btenny » Mon Aug 15, 2011 4:24 pm

What happens to a retirement pension when a part of a company is bought out or sold? Does the pension and responsibility to pay the retiree stay with the parent company or is this negotiable in the deal? What happens when this is repeated N times and the company that is left is small versus the number of retirees that are left? Is there any way to find out what is going on from the retirement fund?

I am concerned about my pension because my company sold out the part of the business that I worked for years ago. As retirees we were told nothing when that occured except our pensions continued as we were promised and they are still listed as coming from my original company. Today they sold another part of the business. I am sure that much occured behind the scenses on the first sale so this new sale and other business changes are making me nervous.

Any insight would be appreciated.
Thanks in advance.
Bill
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Postby jeh676 » Mon Aug 15, 2011 4:39 pm

What happens can vary as part of the deal. If you are a participant in the plan (active, term vested, or in pay), you should get an an Annual Funding Notice. For calendar year plans, if it's a single employer qualified plan, these should be sent by April 30 for the prior plan year. My knowledge of multiemployer plans is really rusty, so I can't for the life of me remember if there is an AFN requirement for multiemployer plans (often union plans).

Does the former employer have a current address for you? Do you have contact information for HR?
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Re: Pensions when company bought out

Postby fsrph » Mon Aug 15, 2011 4:52 pm

btenny wrote:What happens to a retirement pension when a part of a company is bought out or sold? Does the pension and responsibility to pay the retiree stay with the parent company or is this negotiable in the deal? What happens when this is repeated N times and the company that is left is small versus the number of retirees that are left? Is there any way to find out what is going on from the retirement fund?

I am concerned about my pension because my company sold out the part of the business that I worked for years ago. As retirees we were told nothing when that occured except our pensions continued as we were promised and they are still listed as coming from my original company. Today they sold another part of the business. I am sure that much occured behind the scenses on the first sale so this new sale and other business changes are making me nervous.

Any insight would be appreciated.
Thanks in advance.
Bill


I can't tell you if it is standard practice, but I'll tell you what happened to me. First I am talking about an employer pension plan, not a 401K or 403B. When our company was bought out our pension remained with the original company. The new company wanted nothing to do with it. The pension was frozen. It was determined that the pension was underfunded so the PBGC stepped in and took 50 million $$ from the sale to shore up the pension plan. If it wasn't for this action I think my pension would be in jeopardy.

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Postby btenny » Mon Aug 15, 2011 4:55 pm

MY old employer has my current address and my bank stuff as they send me money and a payment notice every month but I do not remember getting any notice on pension balances or similar stuff. I used to get some stuff like that but not any more. My wife still gets hers (different employer) but not me. I am retired and have been drawing for some years now.

Bill
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Postby jeh676 » Mon Aug 15, 2011 5:09 pm

If you are concerned, request a copy of the notice. If your plan is required to provide one, it will provide information about PBGC protections that may provide an additional layer of security for your benefit.
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Postby Steelersfan » Mon Aug 15, 2011 6:17 pm

You should also be getting, or you can request, a report of the funding status of the pension plan. They are required by law to provide that.

If the pension plan is over funded, you'll probably be OK.

However if it's underfunded and outflows aren't greater than investment returns and if the old company doesn't step in to provide additional funding, you'll likely end up in PBGC land at some time in the future.

It's likely the new company has no legal obligation toward the plan.
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