PBGC Becomes Trustee of US Airways Pension Plan for Pilots
FOR IMMEDIATE RELEASE
April 01, 2003
The Pension Benefit Guaranty Corporation (PBGC) today announced that it has become trustee of US Airways' pension plan for pilots and will assume responsibility for paying pension benefits to more than 6,000 pilots.
The pension plan for pilots is underfunded by $2.5 billion, with $1.2 billion in assets to cover $3.7 billion in benefit liabilities. Of the $2.5 billion in underfunding, the PBGC estimates that it will be liable for approximately $600 million, making the US Airways' pilots plan the sixth-largest claim in the agency's 28-year history.
"I'm sympathetic toward the US Airways pilots who will lose some of the pension benefits they were promised," said PBGC Executive Director Steven A. Kandarian. "To prevent this from happening to other workers, pension plans need to be funded in a way that better protects the benefits participants have earned."
Under federal pension law, the maximum guaranteed pension at age 65 for participants in plans that terminate in 2003 is $43,977.24 a year. At age 60, the maximum is $28,585.20. If the plan has sufficient assets, however, participants who are already retired or near retirement can receive more than the guaranteed amounts under the asset-allocation rules of the Employee Retirement Income Security Act of 1974 (ERISA).
With the termination of the US Airways' pension plan for pilots, four of the 10 largest claims in PBGC's history are now from airline companies. Overall, the airline industry accounts for 17 percent of total PBGC claims but fewer than 2 percent of insured participants. Losses suffered by the pension insurance program must be covered by premiums paid by other companies that sponsor defined benefit pension plans. The PBGC receives no general tax revenue and is not backed by the full faith and credit of the U.S. government.
Within the next several weeks, the PBGC will send trusteeship notification letters to all active and retired US Airways pilots. After the transfer of plan documents, the agency will review individual records and calculate each person's benefit according to plan provisions, asset allocation rules, and federal guarantee limits. Information about the US Airways' pension plan for pilots is available at the PBGC Web site. Workers and retirees with additional questions may contact PBGC's Customer Service Center toll-free at 1-800-400-7242. For TTY/TDD users, call the federal relay service toll-free at 1-800-877-8339 and ask for 800-400-7242. General information about PBGC's pension insurance program is available at www.pbgc.gov.
The PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974. It currently guarantees payment of basic pension benefits earned by 44 million American workers and retirees participating in about 32,500 private-sector defined benefit pension plans.
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PBGC No. 03-32