The Pension Benefit Guaranty Corp. will begin paying the retirement benefits of almost 2,000 current and future retirees of a Richmond, Virginia-based mining company.
James River Coal Co., a coal producer and marketer, filed for Chapter 11 protection in U.S. bankruptcy court in April.
The majority of the company's assets were sold to Blackhawk Mining in August. Blackhawk refused to assume James River's pension obligations, which ended on Aug. 31, when the PBGC stepped in.
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According to its news release, the PBGC will pay all of the pension benefits earned by James River Coal retirees up to the legal maximum of $59,320 a year for a 65-year-old retiree.
The plan was only 61-percent funded, with $74 million in assets and $121 million in obligations. PBGC will assume control of the assets, and cover $44.6 million of the shortfall.
As a result, James River's retirees will continue to receive pension benefits without interruption.
The PBGC's single-employer program insures the pensions of nearly 33 million workers and retirees.
PBGC's net premium revenue in 2012 was $2.7 billion, according to its website. Nearly 26,000 sponsors of defined benefit plans pay premiums to the PBGC, which are set by Congress.
In its latest annual report, released in June, PBGC said its fiscal 2013 deficit of $27.4 billion in the single-employer program is projected to narrow to $7.6 billion over the next 10 years.
That is a remarkable improvement from the previous year's projections, which estimated a deficit of $32.5 billion for 2022.
PBGC said premium increases explain, in part, the vastly improved funding status of the single-employer program.
But its multiemployer program remains drastically underfunded, according to the agency's most recent accounting. MEP plan insolvencies affecting more than 1 million of the 10.4 million beneficiaries in MEPs are "more likely and more imminent," it said.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
