PBGC Receives Notice: Pichin Corp. Tells 36,500 TWA Employees Pension Plans May End
FOR IMMEDIATE RELEASE
December 01, 2000
The Pension Benefit Guaranty Corporation (PBGC) was recently notified that Pichin Corporation, a Carl Icahn entity and financial sponsor of two pension plans for Trans World Airlines, Inc. (TWA), intends to request termination of the plans. These plans cover about 36,500 TWA employees and are underfunded by some $700 million.
TWA administers two plans -- the Pilots' Pension Plan with about 4,000 participants is underfunded by some $200 million and the Employees' Pension Plan with some 32,500 participants is underfunded by more than $500 million. Of the 36,500 people, about 15,000 are currently employed by TWA.
"Should Pichin Corporation decide to end the plans, I can assure the already-retired TWA employees that their benefit checks will continue without interruption and that workers and retirees will receive their pensions up to maximum amounts allowed by law," said PBGC Executive Director David Strauss.
Under the terms of a Jan. 5, 1993 agreement, Pichin Corporation has been responsible for financing the pension plans. Under the agreement, Mr. Icahn acquired the right to unilaterally terminate the plans at any time after Jan. 1, 1995.
If the plans are terminated in 2001 and become the responsibility of PBGC, federal law provides that the majority of participants' benefits would be fully covered by PBGC's maximum guarantee, which is $3,392 per month or $40,705 per year for a person age 65 with no survivor benefits. The amounts are adjusted for retirees at other ages or those who elect survivor benefits. Also, in terminated plans, higher salaried employees and some early retirees may experience benefit reductions because federal pension law limits the type and amount of benefits that PBGC guarantees.
Under the 1993 negotiated agreement, PBGC awaits formal announcement from Pichin Corporation as to the termination of the plans.
PBGC has set up a TWA information link on the agency's Web site, www.pbgc.gov and a special TWA telephone hotline, 1-800-707-PBGC (7242). For TTY/TDD users, call the federal relay service toll-free at 1-800-877-8339 and ask to be connected to (202) 326-4312. PBGC will use the Web site and hotline to provide TWA-related information and post updates as developments occur.
PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974 to guarantee payment of basic pension benefits earned by about 43 million American workers and retirees participating in nearly 40,000 private-sector defined benefit pension plans. The agency receives no funds from general tax revenues. Operations are financed largely by insurance premiums paid by companies that sponsor pension plans and investment returns.
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PBGC No. 01-10