Archive

PBGC, Daimler Reach Deal on Chrysler Pension Plans

By Staff Report

Apr. 29, 2009

Former Chrysler parent Daimler immediately will pump $200 million into Chrysler’s underfunded pension plans under an agreement reached Monday, April 27, with the Pension Benefit Guaranty Corp.


In addition, Stuttgart, Germany-based Daimler, which sold an 80.1 percent share of the financially troubled automaker to New York-based private equity firm Cerberus Capital Management in 2007, will pay $200 million into the plans in 2010 and 2011.


If the Chrysler plans are terminated before August 2012, Daimler would pay the PBGC $200 million.


The agreement, which also was signed by Auburn Hills, Michigan-based Chrysler and Cerberus, replaces a 2007 pact between PBGC and Daimler, in which Daimler, among other things, agreed to a $1 billion guarantee if the pension plans were terminated within a five-year period.


Chrysler’s pension plans, as of November 30, 2008, had about $9.3 billion in unfunded benefits, according to the PBGC, of which about $2 billion would be guaranteed by the PBGC if the plans are terminated. The carmaker’s plans have about 255,000 participants.


If the plans are terminated, it would be either the PBGC’s fourth or fifth biggest loss, depending on the current value of the plans’ assets and liabilities, and the biggest termination in terms of number of plan participants affected.


The PBGC’s biggest plan takeover—in terms of loss to the agency’s insurance program and number of participants in the plans—was the 2005 termination of United Airlines’ four pension plans. The plans had about 122,000 participants and $7.5 billion in unfunded PBGC guaranteed benefits.



Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.



Workforce Management’s online news feed is now available via Twitter.

What’s New at Workforce.com?

blog workforce

Come see what we’re building in the world of predictive employee scheduling, superior labor insights and next-gen employee apps. We’re on a mission to automate workforce management for hourly employees and bring productivity, optimization and engagement to the frontline.

Book a call
See the software

Related Articles

workforce blog

Staffing Management

Managing employee time-off requests: A guide for business owners

Summary Vacation, sick time, PTO banks, and unpaid leave are only a few forms of employee time off — Mo...

workforce blog

Technology

Labor analytics: A how-to guide for company leadership

Make sure to start small, clean your data, use data from a variety of sources and use desired business ...

data analytics, employee data, HR Tech, people analytics, talent management

workforce blog

Technology

Why tattleware isn’t the solution for underperforming teams

If your employees can take their smartphones out of their pockets to circumvent your efforts, how can y...

employee monitoring, HR technology, tattleware