Yellow Corp., Nashville, Tenn., officially filed for Chapter 11 bankruptcy Sunday, and some participants in their non-union pension funds now wait to learn how much of their benefits they will be eligible to receive.
Participants whose benefits were transferred to an insurance company through a 2021 pension buyout, meanwhile, are completely insulated from the process.
Officials at Yellow Corp. could not be immediately reached for further information. The company has announced plans to close its operations, and the Pension Benefit Guaranty Corp. has the option to terminate the plans and take them over since they are not fully funded.
According to Yellow's most recent 10-K filing, as of Dec. 31 there were about 4,600 current, former and retired non-union employees in the Yellow Corp. Pension Plan, the Roadway LLC Pension Plan and the Yellow Retirement Pension Plan (formerly the YRC Retirement Pension Plan).
As of that date, the three plans had assets totaling $488 million, while projected benefit obligations totaled $586 million, for a funding ratio of 83.3%, according to the 10-K filing.
According to PBGC's website, when the agency becomes the trustee of a plan, participants currently receiving benefits as of the bankruptcy filing date will continue to receive benefits without interruption during the agency's review.
"These payments are an estimate of the benefits that PBGC can pay under the insurance program. We will pay these benefits in the annuity form you chose at retirement, but they may be less than you were receiving from your plan," according to the website.
"If you have not yet retired, we will pay you an estimated benefit when you become eligible and apply to PBGC to begin payments," the PBGC website says. The PBGC changes monthly maximum pension benefits by age on an annual basis, and says on its website that participants should receive 90% or more of the benefits previously expected.
In December 2021, Yellow had already cut the size of its three non-union pension funds following the purchase of a group annuity contract from an undisclosed insurance company to transfer about $250 million in liabilities. That insurance company eliminated Yellow's obligation to pay benefits to about 3,700 participants. Those participants' benefits are not affected by the bankruptcy or any potential PBGC takeover and will continue to receive 100% of their benefits regardless of whatever the PBGC's actions are regarding the remaining participants in the three non-union pension plans.
Meanwhile, union employees will continue to take home their pension benefits, although the company's previous financial difficulties during the financial crisis of 2008-2009 that necessitated pension benefit reductions means those benefits remain reduced despite a U.S. government bailout of their union pension fund earlier this year.
Yellow had about 10,500 active employees participating in the Teamsters Central States, Southeast & Southwest Areas Pension Fund, Chicago, said a spokesman for the union pension fund in a July 31 email.