Hostess Brands Inc., Irving, Texas, will terminate its defined benefit plan, and the Pension Benefit Guaranty Corp. will assume its liabilities, said Lance Ignon, Hostess spokesman.
The news follows Hostess' announcement on Friday that it will close its business and sell off all its assets.
Hostess suspended payments to the 42 multiemployer pension plans to which it contributes in August 2011. “For active employees, the circumstances differ for each MEPP, so (participants) should contact the administrator of the MEPP” in which they participate, Mr. Ignon said in an e-mail, citing an employee Q&A document. He could not provide further information by press time.
The company's IBC Defined Benefit Plan had about $56 million in assets and $111 million in liabilities as of April 30, according to the PBGC.
“PBGC exists to safeguard retirement security in uncertain times, and that's what we'll do for the 2,300 men and women in Hostess's single-employer plan if the company liquidates. The plan is underfunded by about $55 million,” said J. Jioni Palmer, PBGC spokesman, in an e-mailed statement.
“Hostess belongs to 42 multiemployer plans, but its liquidation wouldn't cause those plans to immediately become insolvent. PBGC doesn't take responsibility for multiemployer plans, but instead gives financial assistance to the plans that can't pay benefits.” Mr. Palmer said.