Agency moves on bakery's pension

By Sean Hao
Advertiser Staff Writer

A government-backed pension insurance agency sought court approval yesterday to take over the pension fund for a defunct 'Aiea baker.

The move by the Pension Benefit Guaranty Corp. to terminate the pension plan for Hawaii Baking Co. comes after the company shut down operations in November.

In its complaint filed in U.S. District Court in Hawai'i, PBGC said the company's pension plan fails to meet minimum financing standards and will be unable to pay benefits when they are due.

Termination of the plan will allow the agency to protect the interests of plan participants, according to PBGC's filing. The action also compels former Hawaii Baking officials, including President James DeYoung, to turn over pension plan records and properties.

About 200 employees lost their medical coverage and then their jobs when the 56-year-old company abruptly closed in November. They and their union told The Advertiser in June that in the months before Hawaii Baking closed, executives diverted money that was supposed to be used for insurance premiums, pension payments and union dues.

Several federal agencies are investigating the demise of Hawaii Baking and what happened to that money. The union and several creditors have filed lawsuits to try to recover some of the assets.

If the company's pension plan is terminated, PBGC will take over the plan and use its own assets to cover any underfinancing in order to pay current and future retirees their benefits up to certain limits. PBGC also would attempt to collect plan underfunding from the employer and could share some of any recovery with plan participants.

The filing of PBGC's complaint against Hawaii Baking follows by a day the agency's warning that it is suffering mounting losses that could force it to seek a taxpayer bailout.

The agency is running a record deficit of $8.8 billion following a series of major bankruptcies involving airlines and steel companies that required PBGC to cover the pension money for affected employees.

Reach Sean Hao at shao@honoluluadvertiser.com or 525-8093.

On the Web

• More information about what happens when a pension plan is terminated can be found on the Web at www.pbgc.gov.