IndyMac Bank underfunded pension plan assumed by PBGC following sale

By Caroline Salls

Pittsburgh, Aug. 18 - IndyMac Bancorp Inc. unit IndyMac Bank FSB's underfunded pension plan has been assumed by the Pension Benefit Guaranty Corp., according to a PBGC news release.

The IndyMac Bank FSB Defined Benefit Pension Plan covers nearly 1,900 of the bank's workers and retirees.

The PBGC said it stepped in because the plan faced abandonment as the bank failed and IndyMac Bancorp liquidated in Chapter 7 bankruptcy.

As previously reported, the U.S. Treasury Department's Office of Thrift Supervision closed the bank on July 11, 2008 and placed it into Federal Deposit Insurance Corp. receivership.

On March 19, the FDIC sold substantially all of the bank's assets to One West Bank Group LLC in a transaction that did not include the pension plan.

The agency said it estimates that the plan is 89% funded, with assets of $33 million and benefit liabilities of $37 million. The PBGC expects to cover $3.7 million of the $4 million shortfall.

The PBGC said it will take over the assets and use insurance funds to pay guaranteed benefits earned under the plan, which was frozen on May 31, 2007 and terminated on July 11, 2008.

IndyMac, a Pasadena, Calif., bank holding company, filed for bankruptcy on July 31, 2008 in the U.S. Bankruptcy Court for the Central District of California. The Chapter 7 case number is 08-21752.

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