U.S. trying to take over LandAmerica pensions
May 12, 2009 (Richmond Times-Dispatch - McClatchy-Tribune Information Services via COMTEX) -- LandAmerica Financial Group Inc. said its pension plan has enough money, but a federal agency yesterday took steps to relieve the Henrico County-based company from overseeing the fund.
The Pension Benefit Guaranty Corp. said the plan is underfunded by 15 percent, or $36 million, and sent notice to LandAmerica of its intent to take over administration of the retirement fund.
About 9,600 employees and retirees have a retirement plan with LandAmerica or a subsidiary. If the request is approved, a federal cap on payments will be imposed.
For a person who retired at age 65, the maximum benefit would be $51,750 per year.
In a news release, the pension agency said it estimated the plan has assets of $210 million and liabilities of $246 million.
LandAmerica took issue with the federal agency's claim.
"Based on the most recent information from the plan's actuary, the plan is appropriately funded in accordance with applicable laws, and there is no basis for it to be terminated" by the Pension Benefit Guaranty Corp., LandAmerica spokeswoman Carol Gentry said in a statement.
"The PBGC," she said, "has not provided any information to us that supports the statements in their press release."
For the year ending 2008, LandAmerica said the pension plan was funded nearly 97 percent, though that valuation was calculated in January 2008 before the company hit financial trouble.
In late November, the company filed for bankruptcy protection and announced plans to sell its primary title insurance subsidiaries. The company also cut healthand life-insurance benefits for retirees.
"Anything that makes our pension more stable, I'm all for," said Shirley Grant, who retired from LandAmerica in December after 49 years with the company.
"Too many things have happened," she said. "We've already lost too much. So many of us now worry day to day, 'Will I get anything next month?'"
On Thursday, the company will be in U.S. Bankruptcy Court in Richmond for approval to sell off stock in four other subsidiaries.
The Pension Benefit Guaranty Corp. filed the notice to take over the pension fund before the sale so that all the subsidiaries, as well as the parent company, will be liable for the unfunded pension amount, spokesman Gary Pastorius said.
If the subsidiaries are sold, it could mean there is less money in the estate to divide among creditors. The agency has filed a claim of $35.7 million against LandAmerica.
The Pension Benefit Guaranty Corp. is funded by investments and insurance premiums paid by companies that offer pension plans.
"We have determined that . . . we can and should do this to protect the [pension] participants and the insurance program," Pastorius said.
The pension corporation will have to file a request in U.S. District Court to take over the plan, he said.
Gentry could not say whether any employees would lose pension money because of the federal cap.
"It doesn't affect the normal working people," Grant said. "Who it really affects is the executives."
About 16 percent of pension-plan participants see a decrease in their monthly payments when the PBGC takes over and the decrease averages about 28 percent, according to a September report from the federal agency.
"Most of the employees will still get their pensions," said Nancy Hwa, communications director for the Pension Rights Center in Washington.
The PBGC guarantees about 44 million employees and retirees enrolled in more than 29,000 pension plans nationwide.
In fiscal 2008, which ended Sept. 30, the corporation took over 67 pension funds. This year, the agency has assumed control of 53 funds, Pastorius said.
