PBGC to Assume Responsibility of Weirton Steel Pension Plan
FOR IMMEDIATE RELEASE
October 21, 2003
The Pension Benefit Guaranty Corporation today announced that it will assume responsibility for the pensions of 9,200 workers and retirees of bankrupt Weirton Steel Corp., the nation's sixth-largest integrated steel producer located in Weirton, W.Va.
The Weirton Steel Corp. Retirement Plan is 39 percent funded, with $530 million in assets to cover almost $1.35 billion in benefit liabilities. Of the $825 million in total underfunding, the PBGC estimates that it will be liable for about $697 million. If the pension plan is not terminated now, the federal pension insurance program is also at risk of incurring an additional loss of as much as $147 million for shutdown benefits, a form of severance pay that companies do not set aside any money in advance to fund. The PBGC receives no general tax revenue. Losses incurred by the insurance program must be covered from premiums paid by other companies that sponsor defined benefit pension plans.
"I regret that the PBGC has been forced to take this course of action," said PBGC Executive Director Steven A. Kandarian. "Because Weirton Steel did not set aside enough money to pay for the pension promises made to its employees, some participants will not get all the benefits they earned. This termination underscores the need for fundamental reforms that will get pension plans better funded, which is the best protection for workers and premium payers."
Although the PBGC has more than $30 billion in assets and will be able to pay benefits for a number of years, the agency reported an unaudited deficit of $8.8 billion as of August 31.
Weirton Steel filed for Chapter 11 bankruptcy protection on May 19, 2003. In its plan of reorganization filed on October 7 and in other public statements, Weirton Steel officials have said the company cannot afford its pension plan and must shed these liabilities to emerge from bankruptcy. The company has also failed to make at least $69 million in legally required contributions to its pension plan, which is grounds for termination under the Employee Retirement Income Security Act of 1974.
Once the PBGC becomes trustee of Weirton's pension plan, retirees will continue to receive their monthly benefit checks without interruption, up to guaranteed federal limits. Other employees will receive benefits when they are eligible to retire.
Under federal pension law, the maximum pension guaranteed for workers in plans that end in 2003 is $3,664 a month (or $43,977 a year) for persons retiring at age 65. Maximum guarantees are reduced for those who retire before age 65 or choose survivor benefits, and increased for those who retire after age 65. Benefit increases made within the last five years are not fully guaranteed.
Workers and retirees do not need to take any action. Until the PBGC becomes trustee of the Weirton Steel pension plan, individuals who have questions or wish to retire should contact the pension plan administrator. Information about PBGC's pension insurance program is available at the agency Web site, www.pbgc.gov.
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 32,500 private-sector defined benefit pension plans.
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PBGC No. 04-03