James Square Nursing Home Inc.'s underfunded pension plan was taken over by the PBGC, although the company intends to cover the entire funding shortfall.
The Syracuse, N.Y.-based company's plan has $3.9 million in assets and is 66% funded with $5.9 million in liabilities, according to a statement from the Pension Benefit Guaranty Corp.
Because of James Square's weakened financial condition, the company asked the PBGC to assume the plan, Mark Squire, James Square president, said in an interview. “The PBGC will be inheriting the assets, and we will be funding the liabilities.”
James Square will be allowed to extend its funding beyond the normal ERISA amortization funding timetable, Mr. Squire said.
“We negotiated a deal to retain the liabilities, which is very rare,” Mr. Squire said. “We are proud of the fact we are working through this and protecting our beneficiaries and protecting the PBGC.”
James Square has not filed for bankruptcy protection, Mr. Squire said.
The plan was frozen in 2008. Mr. Squired decline to discuss whether the company replaced it with a defined contribution plan.
Marc Hopkins, PBGC spokesman, confirmed the agency is negotiating the arrangement with James Square. “We are in talks with Mr. Squire,” Mr. Hopkins said. “The deal isn’t final. Under an agreement, (James Square) would pay (the PBGC) over a period of time to cover the (unfunded) pension liabilities. But if the agreement falls apart, the PBGC is on the hook for the $2 million shortfall.”