The Pension Benefit Guaranty Corp. is assuming responsibility for the underfunded pension plan of a bank with about 3,250 employees and retirees.
The bank is the principal subsidiary of Colonial BancGroup Inc., Montgomery, Ala.
The Colonial Retirement Plan is 75% funded, with about $57 million in assets and $76 million in benefit liabilities, according to the PBGC, Washington.
The PBGC expects to cover about $18 million of the nearly $19 million shortfall. It says it will take over the assets and use insurance funds to pay guaranteed benefits earned under the plan, which ended Aug. 14, 2009, when the bank was declared insolvent.
The PBGC became the plan trustee last week.
Retirees will continue to receive their monthly benefit payments without interruption, and other workers will receive their pensions when they are eligible to retire, PBGC says.
Under federal pension law, the maximum guaranteed pension at age 65 for participants in plans that terminate in 2009 is $54,000 per year, PBGC says. The maximum guaranteed amount is lower for those who retire earlier or elect survivor benefits.