Dana Corp. Latest Revived Company to Retain Pension Plans
Dana Corp. emerged from bankruptcy court protection Feb. 1 with a promise that pleased the Pension Benefit Guaranty Corporation: The auto parts supplier retained its retirement plans, a move PBGC called "a victory for the private defined benefit pension system."
"Dana's pension plans will remain under company sponsorship, which means that no worker or retiree will lose a single hard-earned retirement dollar," said Charles E.F. Millard, PBGC's director. "I am pleased to say that by working with Dana's management over the course of the bankruptcy process, the PBGC helped achieve this success. Dana should be commended for keeping its pension commitments to its workers and executing a successful turnaround that didn't rely on the PBGC as part of its exit strategy from Chapter 11."
The pension overseer has in recent years assumed a mountain of pension liability as steelmakers, airlines, and companies in some other sectors declared bankruptcy and shed their plans, leaving PBGC to step in and assume the liability. This new trend keeps things from getting worse, in the government's eyes. Dana continued making legally required fund contributions during its bankruptcy and consolidated 34 defined benefit plans into seven pension funds, reducing its minimum funding contributions by $60 million through the year 2012. More than 53,000 people -- about 15,000 of whom are active employees -- are covered by its plans, the agency said.
Federal-Mogul Corp.did the same thing when it emerged from bankruptcy in December 2007 with a plan covering 33,000 participants. PBGC reached a $77.5 million agreement with Swedish-owned Electrolux Home Products Inc. to protect retirement benefits of more than 2,350 former employees.