Federal Pension Insurer Moves to Protect Benefits of 35,000 at National Steel
FOR IMMEDIATE RELEASE
December 02, 2002
The Pension Benefit Guaranty Corp. (PBGC) today announced its intention to assume responsibility for the pensions of more than 35,000 workers and retirees of National Steel Corp. of Mishawaka, Ind.
"The PBGC is stepping in to protect the pension benefits of National Steel's workers and retirees because the company cannot meet its pension obligations," said Executive Director Steven A. Kandarian. "Delay would simply allow the pension plans to become even more underfunded, putting at risk the insurance program that provides retirement security for millions of Americans."
The PBGC has concluded there is no reasonable scenario under which National Steel can afford to maintain the pension plans. National Steel has said it will not make any additional contributions to the plans, and the company has already missed more than $150 million in required minimum funding contributions.
The PBGC will seek to become trustee of seven pension plans sponsored by the company: National Steel Corporation Retirement Program; National Steel Corporation Pension Plan-Hourly Employees; Granite City United Steelworkers of America Pension Plan; Granite City Pension Plan for Chemical Workers, Bricklayers, Hodcarriers, Blacksmiths, and Watchman's Union; Weirton Retirement Program; National Steel Pellet Company Pension Plan for Hourly Wage Employees; and Pension Plan for Salaried Employees of National Steel Pellet Company.
"The PBGC's insurance guarantees will protect the basic pension benefits of National Steel workers," Kandarian said. "Retirees will continue to receive their monthly checks up to guaranteed federal limits, and other employees will receive benefits when they are eligible to retire."
The National Steel pension plans are only 47 percent funded, with roughly $1.3 billion in assets to cover more than $2.8 billion in benefit liabilities. Of the $1.5 billion in total underfunding, the PBGC estimates that it would be liable for more than $1.1 billion, making it the second-largest claim in its history. The agency will take over the plans' assets and use PBGC insurance funds to pay the guaranteed pension benefits of covered workers.
With the termination of National, the steel industry accounts for more than 40 percent of all claims against the pension insurance program but only 2 percent of covered workers. Since October 1, 2001, the PBGC has absorbed nearly $3 billion in claims from a number of steel companies, including Acme Metals, CSC Steel, GS Industries, and Empire Specialty Steel. In March 2002, the agency assumed $1.6 billion in pension liabilities from LTV Steel Corp., the largest claim in PBGC history.
Under federal pension law, the maximum pension guaranteed for workers in plans that end in 2002 is $3,579 a month (or $42,954 a year) for persons retiring at age 65. Maximum guarantees are adjusted for retirees older or younger than age 65 and for those who choose survivor benefits.
Workers and retirees do not need to take any action. Until the PBGC becomes trustee of the National Steel pension plans, individuals who have questions or who wish to retire should contact National Steel's pension plan administrator. Information about PBGC's pension insurance program is available at the agency Web site.
PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974. It currently guarantees payment of basic pension benefits for about 44 million American workers and retirees participating in over 35,000 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 by PBGC's investment returns.
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PBGC No. 03-07