Kodak to workers: No lump sum payments allowed
Sep 18, 2012 (Menafn - Dayton Daily News - McClatchy-Tribune Information Services via COMTEX) --Eastman Kodak has sent a letter to its U.S. employees telling them that that while the company is in Chapter 11 bankruptcy protection, it cannot pay large "lump sum" payments to employees on their retirement or separation from the company.
The restriction was effective as of Kodak's bankruptcy filing on Jan. 19.
The company added that, according to actuaries, its pension plan is 73.7 percent funded, and that unless the plan is funded at 100 percent "or greater, " lump sums cannot be paid, according to the company's letter, which was dated Monday.
The letter also tells employees that if Kodak had reinstated lump sum payments this year, the Pension Benefit Guaranty Corp. -- a federally backed agency which tries to salvage private defined benefit pension plans of bankrupt or troubled companies -- "would likely take action to terminate" the pension plan.
A spokesman for the PBGC did not have an immediate reaction to Kodak's letter.
Although the pension plan's funding level isn't adequate to offer lump sum payments, "the plan remains well funded and is not projected to require company contributions for several years," Kodak's letter says.
Arthur Roberts, president of the Eastman Kodak Retirees Association, agrees with that assessment. He said Tuesday that while the restriction may be of some concern to recent or future retirees, Kodak's pension is plan is actually "well funded, " even if it isn't 100 percent funded.
"The plan has always been well funded," Roberts said.
Throughout its nine-month bankruptcy process, Kodak has maintained that it considers its operations at the Miami Valley Research Park in Kettering essential to its future. While the company has not given a recent employee count, it has said about 500 employees and contractors work there developing and building commercial inkjet printers, large systems capable of producing 4,000 digital-format, photo-quality pages a minute at a cost of less than one cent a page.
The Kettering operation is the company's second largest operation, next to its Rochester, N.Y. headquarters.
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