Federal agency takes over pension for shrinking law firm; was plan short by $9M or $39M?
Detroit law firm Butzel Long has announced that the federal government will take over its pension obligations.
The Pension Benefit Guaranty Corp. will assume pension obligations for about 450 plan participants, according to the National Law Journal and Crain’s Detroit Business. About 350 of those participants are partners and employees who are no longer with the firm.
According to the PBGC blog Retirement Matters, the agency stepped in because Butzel Long would be unable to maintain its pension plan and remain in business.
The PBGC pays up to $57,500 a year in pension obligations. About 10 percent of the fund participants will see their pensions capped, according to the NLJ. The Crain’s story, citing prior reports, puts the figure at 10 of the 450 participants.
Previous stories have said the pension was about $9 million short of its target, but the PBGC blog says shortfall estimates in that range are based on assumptions that the pension plan is ongoing. The PBGC measures funding on a termination basis, which often reveals a much higher shortfall.
“According to our estimates,” the blog says, “as of March 20, 2013 (the plan termination date), the pension plan was 47 percent funded with $34 million in assets to pay $73 million in benefits. The agency expects to cover most of the $39 million shortfall.”
Butzel Long has 125 lawyers, down from a peak of 243 lawyers in 2008; the NLJ says. Many lawyers left because of disagreements caused by a 2007 expansion, according to Crain’s Detroit Business.
