Biglaw, Federal Government, Money, Old People, Perks / Fringe Benefits

The Feds Step In to Take Over Yet Another Underfunded Biglaw Pension Plan

Which law firm turned to the government for help this time, and how underfunded was its pension plan?

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PBGC TO ASSUME RESPONSIBILITY FOR PROTECT BENEFITS AT BUTZEL LONG — PRESS RELEASE

PBGC will pay benefits for nearly 470 current and future retirees of Butzel Long, a law firm based in Detroit, Mich.

The agency stepped in because the firm would be unable to maintain its pension plan and remain in business.

PBGC will pay all pension benefits earned by the law firm’s retirees up to the legal limit of almost $57,500 a year for a 65-year-old.

Retirees will continue to get benefits without interruption, and future retirees can apply for benefits as soon as they are eligible.

Recent media reports have suggested that Butzel Long’s plan was short by at least $10 million, but that estimate assumed the plan was ongoing. At PBGC, we measure funding on a termination basis, which often reveals a much higher shortfall.

According to our estimates, as of March 20, 2013 (the plan termination date), the pension plan was 47 percent funded with $34 million in assets to pay $73 million in benefits. The agency expects to cover most of the $39 million shortfall.

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PBGC can provide general information now and will be able to answer more detailed questions once we receive the pension plan’s records. Participants in Butzel Long’s plan will be notified by letter after the transfer occurs.

For additional information, please email us at mypension@pbgc.gov or call 1-800-400-7242 (8 a.m. to 7 p.m. EST, Monday – Friday) (TTY/ASCII: call 1-800-877-8339 and ask to be connected to 1-800-400-7242).

Additionally, Butzel Long retirees who get their pension from PBGC may be eligible for the federal Health Coverage Tax Credit. For more information, see PBGC’s Health Coverage Tax Credit (HCTC) FAQs.

Butzel Long first opened for business in 1854 and is considered one of the oldest law firms in the Midwest. The firm’s clients are involved in a number of fields including advertising, automotive, and financial services among others. In 2008, after reaching a peak of some 500 employees, the firm was hit with financial troubles especially in Michigan and New York City.

In January of this year, the firm asked PBGC to assume responsibility for the pension plan. Butzel Long also has affiliated offices in Washington, D.C., Mexico, and China.

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PBGC to Assume Responsibility for Pension Benefits at Butzel Long [PBGC]
U.S. to assume Butzel Long’s pension obligations, law firm says [Crain’s Detroit Business]
Michigan-based Butzel Long law firm gets federal assistance for underfunded pension obligations [MLive.com]
Michigan-based Butzel Long law firm seeks assistance with underfunded pension obligations [MLive.com]
Federal Agency Relieves Law Firm of Pension Debt [National Law Journal]
Federal agency takes over pension for shrinking law firm; was plan short by $9M or $39M? [ABA Journal]

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