Icahn Unit Desires To Terminate TWA Pension Plans; PBGC Would Become Trustee
FOR IMMEDIATE RELEASE
December 15, 2000
Pichin Corp., owned by financier Carl Icahn, yesterday gave formal notice to the Pension Benefit Guaranty Corporation (PBGC) that it desires to terminate two Trans World Airlines, Inc. (TWA) pension plans on Jan. 1, 2001. The plans cover about 36,500 people including more than 15,000 active TWA workers.
Pichin has been responsible for financing the two pension plans under a Jan. 5, 1993 agreement in which Mr. Icahn also acquired the right to unilaterally terminate the plans at any time after Jan. 1, 1995. TWA has continued to administer the plans that, together, are underfunded by approximately $700 million. The Pilots' Pension Plan, covering around 4,000 participants, is underfunded by some $200 million. The Employees' Pension Plan, with about 32,500 participants, is underfunded by more than $500 million.
The plans are expected to terminate as of Jan. 1, 2001 and become PBGC's responsibility. Most covered workers will receive the same benefits they are now receiving or would be entitled to receive, up to the maximum guarantee under federal law. For plans that terminate in 2001, the maximum guarantee is $3,392 a month (or $40,705 a 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. 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.
For a period of time after plan termination, TWA will continue to calculate benefits. When all plan records are transferred to PBGC, the agency will review individual records and calculate each person's benefit according to the pension plan's provisions, the benefits earned and PBGC's guarantees under federal law.
In early January, PBGC will send each participant a letter notifying them that PBGC has become trustee of their plan and requesting some specific employment-related information. PBGC is planning a number of meetings for TWA plan participants at locations and times to be announced.
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. 01-11