Federal Pension Insurer To Pay Special Metals Corp. Pensions
The Pension Benefit Guaranty Corporation today announced it has assumed responsibility for three pension plans covering more than 3,900 workers and retirees of Special Metals Corp., a specialty metals firm based in Huntington, W.Va., that emerged last week from Chapter 11 bankruptcy protection.
"The PBGC is stepping in because Special Metals and its affiliates meet the legal criteria for transferring these three pension plans to the federal pension insurance program," said PBGC Executive Director Steven A. Kandarian. "Retirees will continue to receive their monthly benefit checks without interruption, up to guaranteed federal limits, and other employees will receive benefits when they are eligible to retire."
Special Metals is transferring the pension liabilities to the PBGC under the "distress termination" provisions of federal pension law, which allow companies to shed their pension obligations if such a step is necessary to emerge from bankruptcy. In the case of Special Metals, the exit lender would not provide financing unless the plans were terminated. The three Special Metals pension plans, which were terminated as of October 20, 2003, are the Inco Alloys International Inc. Retirement Plan for Hourly Employees, Pension Plan for Hourly Employees of Special Metals Corp., and Special Metals Corp. Salaried Employees Pension Plan. The plans have about $144 million in assets and $299 million in liabilities. Of the $155 million shortfall, the agency will be liable for about $129 million.
In an agreement with the PBGC, Special Metals withdrew its application for a distress termination of two smaller pension plans, which together cover about 160 hourly workers at the company's Princeton, Ky., and Dunkirk, N.Y., facilities. These underfunded plans will continue under the sponsorship of the reorganized Special Metals Corp.
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. The maximum guaranteed amount is lower for those who retire earlier or elect survivor benefits. In addition, certain early retirement subsidies and benefit increases made within the past five years may not be fully guaranteed.
Within the next several weeks, the PBGC will send trusteeship notification letters to all participants in the Special Metals plans. 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. Workers and retirees with questions may contact PBGC 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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