BY THE NUMBERS
$101.9 million: Assets in Olan Mills Inc. pension plan
$143.1 million: Liabilities for Olan Mills pensioners
$41.2 million: Plan shortfall being absorbed by the Pension Benefit Guaranty Corp.
$54,000: Maximum annual pension benefit for Olan Mills retirees; PBGC does not insure benefit payments above this level.
Source: Pension Benefit Guaranty Corp.
• The U.S. government-sponsored Pension Benefit Guaranty Corp. has taken over as trustee of Olan Mills Inc.'s pension plan
• PBGC is now responsible for paying pension benefits to the plan's nearly 4,300 participants up to limits set by law.
• Pension Benefit Guaranty Corp. will collect and verify information about Olan Mills' pension plan participants and beneficiaries. It is sending letters informing people that PBGC is responsible for paying benefits.
• People receiving pension benefits will be paid without interruption. The payments will be an estimate of the benefits PBGC can pay.
• The agency will calculate future benefits, subject to legal limits, owed to participants. Due to the limits, some participants may receive a benefit less than the amount provided in the plan.
Source: Pension Benefit Guaranty Corp.
• People in the Olan Mills plan who are not already receiving benefits plan can go to www.pbgc.gov to find out more.
• The Pension Rights Center can help workers and retirees make sure they have relevant documents for their pension plan in case there's a dispute over their benefits. Its website is www.pensionrights.org.
Olan Mills Inc. was one of Chattanooga's biggest successes, going from a woodshed darkroom 80 years ago to a multimillion-dollar network that became the nation's largest family portrait company.
But the company -- hit by the rise of the digital age and a shaky economy, and just a fraction of the size it was two decades ago -- was sold last year with a majority of the proceeds plowed into an employee pension fund that still has a $41.2 million shortfall, records show.
The federal Pension Benefit Guaranty Corp., which rescues underfunded company pension plans, earlier this year stepped in to make sure nearly 4,300 former Olan Mills employees and retirees aren't denied the pensions they are owed, officials said.
The rescue is one of the biggest, if not the largest, of a Chattanooga private company's pension plan by the federal agency, according to an expert.
But while the agency's involvement assures that pensions will be paid, it generally estimates that just 85 percent of people in the plan will receive all their benefits.
Because of legal payout limits, PBGC may not be able to pay some high earners all the pension they thought they were owed, according to the agency.
For 2011, when the plan was terminated, PBGC had a maximum annual payout of $54,000 per year for a 65-year-old retiree, the agency said.
All of that leaves some former Olan Mills workers wondering what the pension takeover will mean for their futures.
Bonnie Schutte worked for Olan Mills for 25 years, and as she enters her 60s, she's counting on the company pension to help her in her golden years. But she was dismayed when she heard recently that the plan had been taken over by PBGC.
"We gave our heart and soul," said the Springfield, Ohio, woman. "My sister worked there. My niece worked there. We had a lot of connection. We want our pensions. It's not sour grapes."
PBGC took over the underfunded Olan Mills plan in February.
When Olan Mills was sold to Minnesota-based rival Lifetouch last November, the pension plan wasn't part of the sale, officials said.
According to PBGC, the plan was terminated then and has only enough money to pay about 70 percent of its liabilities -- $101.9 million in assets compared to $143.1 million in liabilities. PBGC is responsible for the entire $41.2 million funding shortfall.
"There are times that we step in when a plan will be abandoned," said PBGC spokesman Marc Hopkins. "In the Olan Mills case, it would have been abandoned. That's why we stepped in."
Under an agreement reached with Olan Mills, PBGC said the majority of the money from the sale to Lifetouch went to help bolster the pension plan.
Because of confidentiality agreements, PBGC would not reveal how much money was put into the plan from the sale. PBGC officials anticipate more money will come into the plan when an Olan Mills company wraps up its affairs, but it will be much less than the sale proceeds.
According to PBGC, Olan Mills officials came to the PBGC early in its sale negotiations with Lifetouch. PBGC said it then worked with Olan Mills to come to the agreement regarding the pension fund.
While the Olan Mills plan was underfunded, it was in compliance with government-regulated minimum levels of pension funding, according to the agency.
Olan Mills II, the longtime former chief of the company, said in a telephone interview recently that he believes all Olan Mills retirees and former workers in the plan will receive what they're entitled, through he admitted he is unsure of some specifics of the deal with PBGC.
"I felt satisfied with the arrangement we were able to make," he said.
However, Mills said he was surprised at PBGC's calculations of a $41.2 million shortfall.
"They're in the business of making themselves look good," Mills said. "We assumed we were much closer (between pension plan assets and liabilities)."
According to PBGC, its calculations regarding the value of a pension fund are different from a company's. Companies look at their funds as ongoing entities while PBGC examines them as terminated plans, according to the agency.
Mills said the Olan Mills pension plan has been underfunded for some time and the situation worsened when the stock market crashed in 2008.
He said the company put in the extra funds after the sale to try to catch up, though it didn't have enough money to make up the entire shortfall. Mills said other proceeds from the sale were used to pay additional company bills.
He wouldn't say how much the company put into the plan. The sales price of his family-owned portrait studio to Lifetouch wasn't revealed.
Mills also said he has heard criticism about significant contributions he gave to Democratic Party causes just months before the November 2011 sale and the termination of the pension plan.
According to the Federal Election Commission, Mills in June 2011 gave $35,800 to the Obama Victory Fund, which supports President Obama's 2012 re-election bid, and then $30,800 to Democratic National Committee Services Inc., the organizational and fundraising power behind the party.
The longtime supporter of Democratic candidates bristled when asked about making political contributions while the pension plan is underfunded.
"I gave to the United Way ... the Hunter [Museum of American Art]. I give to a lot of things," he said. "I'm supposed to stop?"
PBGC doesn't use taxpayer money to pay the pension obligations it assumes. It uses proceeds of investments as well as insurance premiums paid by companies that sponsor pension plans.
However, some worry about PBGC as it assumes more terminated plans. Its growing deficit has heightened concerns that taxpayers ultimately will need to cover the shortfall.
Hopkins said the 2008 economic crash and low interest rates have delivered a blow to many pension plans.
Last year, PBGC ran the biggest deficit of assets versus liabilities in its 37-year history at $26 billion.
In 2011, PBGC took on 152 underfunded and terminated pension plans. It now is responsible for the retirement benefits of about 1.5 million people, according to the agency.
Nancy Hwa of the Washington, D.C.-based Pension Rights Center, a consumer group aimed at protecting the retirement security of Americans, said other pension plans have been and are funded worse than the Olan Mills plan.
She cited American Airlines, which filed for bankruptcy protection late last year. According to PBGC, American Airlines' four defined benefit plans have assets of $8.3 billion and liabilities of $18.5 billion.
Lifetouch purchased some but not all of the assets of Olan Mills, such as the pension plan and real estate.
"They didn't want to take on the pension or any other liability," Mills said. Kelvin Miller, Lifetouch's corporate vice president of communications, said the Olan Mills pension plan wasn't its to assume.
"It was created ... by previous ownership. It was their responsibility to carry out," he said.
Miller said Lifetouch is a 100 percent employee-owned company whose employee stock ownership plan provides funds for retirement.