The U.S. government’s pension watchdog said Thursday it will take over three pension plans of bankrupt A&P because the buyers of most of the supermarket chain’s stores have declined to pay benefits.
The three A&P plans cover the retirement benefits for more than 21,000 people and are underfunded by about $292 million. A&P, also known as Great Atlantic & Pacific Tea Co., filed for Chapter 11 in July, its second bankruptcy of the decade, with plans to sell and close some stores quickly and shop the others.
The Pension Benefit Guaranty Corporation “is stepping in because A&P has sold the majority of its assets in bankruptcy proceedings and most of the buyers declined to keep the plans going,” the agency said in a news release.
The PBGC will pay all pension benefits earned by A&P retirees up to the legal maximum of $60,136 a year for a 65-year-old. Retirees will continue to get benefits without interruption, and future retirees can apply for benefits as soon as they are eligible.
A&P had 296 operating grocery and liquor stores when it sought bankruptcy protection. According to the Wall Street Journal, it is now down to its last 16 operating liquor stores, which are turning a profit, and some real estate that is still being marketed.
The company’s pension plans include the Great Atlantic & Pacific Tea Co. Inc. Plan, which is 55% funded with $135 million in assets to pay $244.4 million in benefit liabilities. The PBGC expects to cover $105.6 million of the plan’s $109.4 million shortfall.
A second plan, the Pathmark Stores Inc. Pension Plan, is 64% funded with $327.2 million in assets to pay $509.5 million in liabilities. The PBGC expects to cover nearly all of the $182.3 million shortfall as well as that of the Delaware County Dairies Inc. Hourly Employees Pension Plan, which has no assets and covers only eight people.
A fourth plan that is administered by UFCW Local 464A and Acme Markets has not been terminated and is an ongoing plan.