Hanesbrands has put $7 million into the pension plan in September and will make an additional $6.8 million payment by September 15, 2010
The Pension Benefit Guaranty Corporation (PBGC) has reached a $13.8 million agreement with Hanesbrands to strengthen the funding of its retirement plan.
Unlike situations where the PBGC assumes responsibility for pension plans that can no longer pay benefits, the Hanesbrands Pension Plan, which covers more than 30,000 workers and retirees, remains ongoing and under the company’s sponsorship, said PBGC.
Hanesbrands has accepted to put more money into the plan for the benefit of participants and to reduce risk to the PBGC insurance program by improving the plan’s financial health.
As per the agreement, Hanesbrands has put $7 million into the pension plan in September and will make an additional $6.8 million payment by September 15, 2010. The payments are in addition to any required contributions to the plan.
The agreement stems from the February 8, 2009 closure of the company’s Eden Textiles facility in Eden, North Carolina, which affected 290 of the active participants in the National Textiles Pension Plan. The National Textiles plan has since been merged into the Hanesbrands plan.
The Employee Retirement Income Security Act of 1974 (ERISA), the federal pension law that created the PBGC, requires the agency to seek additional protection when more than 20% of a company’s employees covered by a pension plan lose their jobs due to a cessation of operations at a facility. However, the agency strives to craft settlements that safeguard pension plans, while recognising the business needs of the companies that sponsor them.
As of September 8, 2009, the agency had negotiated 18 settlements involving cessation of operations. These agreements added a total of about $400 million to pension plans.