K-Mart Corporation Bankruptcy!

[tonybologna]

What is the name of your state (only U.S. law)? Tennessee

Hello guys and gals! It's been a while since posting on the forums. The last thread of mine was in regards to the passing om my dad. Now, I'm moving onto some questions in regards to my mother.

My mother has worked at K-Mart Corporation for over 35 years. She's currently still working at nearly the age of 70. She is drawing her pension but still working part-time. She started drawing her pension in 2006 with over 30 years of service.

Her pension is what I call a joke! My mother makes pretty good money at K-Mart after all these years but her retirement money is an absolute joke. When she called about here retirement in 2005 they told here what she could draw. She liked to fell out of her chair with the number she was told.

She was to get a whopping $288.00/month for her pension. Yeah, that's right! Only $288 a month for over 30 years of service to the company. Well, my mother decided to take the pension and continue working part-time.

She didn't think she could make a comfortable living with her pension and SSI. Well she continues to work today but I have been looking for answers about this fishy amount of retirement money. I even made her an appointment with a local lawyer back in 2007 but my mother was stubborn and wouldn't go.

She had called K-Mart about the matter shortly after drawing her pension and she was told that because of the bankruptcy filing by the company all retirees pension was frozen. The bankruptcy for K-Mart happened back in the early-mid 2000's I believe. My mother just accepted that was the reason but I certainly didn't.

Now, my mother is considering full retirement but I want some opinions/answers about the process and handling of this matter by K-Mart. I don't know the bankruptcy laws in Tennessee but I feel that the company has taken advantage of my mother. She was making around $2000/month back when she accepted her pension.

To get only $288/month after all her time and service there seems really wrong. Anybody care to elaborate on what may have been going on with this situation? I can make her another appointment but I wanted to get some expert opinions from here first. I mean if K-Mart has done something illegal and she's owed money that's a lot of backpay now for well over 5 years since filing for her pension. Thanks!

 

[Zigner]

Apparently, they entered bankruptcy proceedings in 2002...

http://en.wikipedia.org/wiki/Kmart#Bankruptcy

 

[tonybologna]

Apparently, they entered bankruptcy proceedings in 2002...

http://en.wikipedia.org/wiki/Kmart#Bankruptcy

I'm sorry I meant the early-mid 2000's. I hadn't even looked at Wiki for an exact date. Any suggestions or further comments? Thanks!

 

[tonybologna]

No experts or members with knowledge on this situation wanna comment? Thanks!

 

[OHRoadwarrior]

Is her pension coming from the Kmart pension fund or the federal Pension Benefit Guarantee Corp? If it is being administered by them, they are a gov't agency following specific guidelines. Your mother should have received results of any court actions via paperwork from the fund, if the pension was reduced as a result of the bankruptcy association. I would contact the pension administrator and request duplicates of any legal processes or administration action that reduced it. That should give you the formula to compute whether she is receiving the proper amount.

 

[Zigner]

I think your mother is out of luck. KMart went BK.

 

[justalayman]

not sure what you are looking for. You toss out a lot of numbers but the numbers you are missing is what was the determined pension payment scheduled to be.


So, do you have any idea what the pension program was scheduled to pay per year earned?

 

[tonybologna]

=OHRoadwarrior;2734621]Is her pension coming from the Kmart pension fund or the federal Pension Benefit Guarantee Corp? If it is being administered by them, they are a gov't agency following specific guidelines. Your mother should have received paperwork from the court, if the pension was reduced as a result of the bankruptcy association. I would contact the pension administrator and request duplicates of any legal processes or administration action that reduced it. That should give you the formula to compute whether she is receiving the proper amount.

I believe her pension is directly from K-Mart Corporation. I have seen her pension statement myself but it's been a good while back. I'm pretty sure it has K-Mart's name on it.

I know nothing about Pension Benefit Guarantee Corp. She didn't start drawing her pension until after the bankruptcy case ended. Who would be the pension administrator? Thanks!

not sure what you are looking for. You toss out a lot of numbers but the numbers you are missing is what was the determined pension payment scheduled to be.
So, do you have any idea what the pension program was scheduled to pay per year earned?

She never knew of what she was to be paid. There was no numbers being tossed around. My mother worked for years just under management. She was store clerk for years and has made good money. Made too much money to get that little pay for what was 30+ years at time of seeking her pension. The numbers I gave are the facts. No imaginary numbers.

I do not know what K-Mart's policy is/was on pension per year of service. She has always been given excuses/runaround when trying to contact the higher-ups in the corporation about this matter. Thanks!

 

[justalayman]

from what I have read, the pension was not affected by the BK.

 

[tonybologna]

from what I have read, the pension was not affected by the BK.

Exactly my thinking on this as well. The bankruptcy happened in early 2000's and she had already worked there for over 25 years anyhow. Most of this time with a nice-paying job close to management pay.

 

[justalayman]

tonybologna;2734627]
She never knew of what she was to be paid

. then how can she argue she is not being paid properly?

. The numbers I gave are the facts. No imaginary numbers.

I didn't say they were imaginary. I said they mean nothing without knowing what the pension was scheduled to pay per year of service.

I do not know what K-Mart's policy is/was on pension per year of service. She has always been given excuses/runaround when trying to contact the higher-ups in the corporation about this matter. Thanks!

that simply isn't true. Pension programs are controlled under federal law and there are required disclosures. She needs to contract the plan administrator and request a plan summary.

 

[tonybologna]

. then how can she argue she is not being paid properly?

I mean with the amount she was given compared to her work history and years of service doesn't add up. She never discussed what her pension would be with K-Mart.

What she was told to do was to call the Corporation and ask what it was going to be. This was done by automation back in 2006. It was then she was told the amount would only be $288/month. She couldn't talk to anyone over the phone about it.

I didn't say they were imaginary. I said they mean nothing without knowing what the pension was scheduled to pay per year of service.

Fair enough! That wasn't ever known. Still not known either. Like I said, she was being avoided with her questions.

that simply isn't true. Pension programs are controlled under federal law and there are required disclosures. She needs to contract the plan administrator and request a plan summary.

What's not true? The part about who controls her pension? I didn't say anything about it other than I thought K-Mart is where her pension is coming from and not the Pension Benefit Guarantee Corp.

Let's make this simpler. Why would be the plan administrator? Would she need to contact K-Mart directly? That's not gonna be easy because almost all of K-mart's phone contact is automated.

 

[justalayman]

Kmart filed BK Jan 22, 2002

emerged from BK May 6, 2003

this info is apparently a couple years old. I do not know if it is still accurate:

The keeper of records for the Kmart Corporation Employee Pension Plan is ING You need to write them to verify your address and get a PIN number. The address is

ING
Attn: Pension Service Center
POB 56856
Jacksonville, FL 32241-6856

Then you can log onto https://sears401k.csplans.com/csportal/w… to access your pension account.
Source(s):
Sears Holdings Corporation, Hoffman Estates, Illinois

I found this as well:

Kmart Pension Plan for Sears_Holdings (SHLD)

Kmart Pension Plan

•
The accrual of benefits under Kmart’s qualified pension plan (“Kmart Pension Plan&#8221 was eliminated as of January 31, 1996. Therefore, service after January 31, 1996 is not recognized for benefit accumulation purposes, but is recognized for vesting and early retirement subsidy purposes.


•
Annual retirements benefits were based on the “final average compensation formula.” The formula was 1.50% of the average of the officer’s best five compensation years prior to January 31, 1996 multiplied by years of service after age 21 and prior to January 31, 1996 up to 35 years minus 2% of the applicable Social Security benefit for each year of services up to 30 years at age 65.

The table below shows information with respect to each plan that provides for payments or other benefits at, following, or in connection with retirement of the named executive officers eligible to receive benefits. The years of credited service under the pension plans are as of February 3, 2007, rounded to the nearest whole number. The present value of accumulated benefit uses mortality and interest rate assumptions consistent with those used in the Company’s financial statements. See footnote (b) for assumptions used for the present value of accumulated benefit calculation. The only named executive officers eligible for pension benefits are Ms. Austin and Mr. Lacy. Messrs. Lewis, Monaghan, Johnson, Crowley and Ms. McGuire are not eligible to receive pension benefits.

Name
Plan Name
Number
of Years
Credited
Service
(a)

Present
Value of
Accumulated
Benefit
(b)

Payments
During Last
Fiscal Year
(c)
Karen A. Austin

Kmart Pension Plan 11 $ 74,939 $ 0
Alan J. Lacy

Sears pension plans 10 $ 376,869 $ 1,037,251
(a) The number of years of credited serviced is the number of years in the plan from the first anniversary of the participant’s hire date to the date his or her benefits ceased to accrue.

(b) The amounts represent the present value of accumulated benefit using the Sears Holdings’ pension measurement date of December 31, 2006. The following assumptions were used in the present value calculation.

•
Election and commencement of benefits at earliest possible retirement age without any benefit reduction due to age. For Sears Pension Plan participants this means age 65, and for Kmart Pension Plan participants this means the 90 points date. Under the terms of the Kmart Pension Plan, points equal the participant’s age plus service with full pension benefit eligibility attained after earning 90 points.


•
Form of payment under the Sears Pension Plan is 90% of plan participants electing lump sums, 10% annuities.


•
Form of payment under the Kmart Pension Plan is 100% of participants electing annuities.


•
Sears pension plans Mortality for Annuity Benefits: RP 2000 table projected 10 years for males and females.


•
Sears pension plans Mortality for Lump Sum Benefits: RR 2001-62 table required by IRS.


•
Kmart Pension Plan Mortality for Annuity Benefits: RP 2000 table projected 10 years for males and females, male ages set forward three years, female ages set forward two years.


•
For the Sears pension plans, an interest rate of 5.15% for qualified lump sum payments and an interest rate of 60% of the qualified plan basis for non-qualified lump sum payments.


•
Discount rate of 5.9% as of December 31, 2006.


•
No pre-retirement decrements.


(c) In accordance with his termination, Mr. Lacy was paid a lump sum of $885,944 from the non-qualified plan on August 21, 2006. Also, in accordance with 409A of the Internal Revenue Code, an additional lump sum benefit from the non-qualified plan of $151,307 was delayed six months and paid out on January, 29 2007. While Mr. Lacy’s second payment occurred after the pension measurement date it is included in this column as it occurred during the 2006 fiscal year.

 

[tonybologna]

The keeper of records for the Kmart Corporation Employee Pension Plan is ING You need to write them to verify your address and get a PIN number. The address is

ING
Attn: Pension Service Center
POB 56856
Jacksonville, FL 32241-6856

Thanks for that!

Annual retirements benefits were based on the “final average compensation formula.” The formula was 1.50% of the average of the officer’s best five compensation years prior to January 31, 1996 multiplied by years of service after age 21 and prior to January 31, 1996 up to 35 years minus 2% of the applicable Social Security benefit for each year of services up to 30 years at age 65.

That's where I need to figure out if her pension is right. That's a lot to sift through to get an amount. How would I get an accurate figure going by her years of service at the time of accepting pension?

It would have been 20 years of service going by the 1996 cut-off date. I don't get what all that in between stuff means from the above quote. Especially, the minus 2% deduction on the SSI benefits. Care to elaborate? Thanks!

BTW the URL here:Kmart Pension Plan for Sears_Holdings (SHLD) isn't working. Giving 404 error. You sure it's right? I did remove the from the start and end.

 

[OHRoadwarrior]

Depending on how the fund was setup and her category within it, a few scenarios come to mind.

The first scenario is that based on number of contributing fund members decreasing over time, in comparison to the benefits it was paying, the administrators kept reducing payouts to comply with federal funding requirements. If Kmart was terminated from participation in the fund when they went bankrupt and no other companies were a party to it (unlikely to have), the fund has been paying benefits with no contributions since the bankruptcy.

The second scenario is the fund at some point over the years may have invested in poor investments heavily and the fund balance took a bath.