PBGC Compels Renco Group to Pay Pensions at WCI Steel
FOR IMMEDIATE RELEASE
March 28, 2006
WASHINGTON- The Pension Benefit Guaranty Corporation today announced the successful end of its effort to prevent abandonment of the underfunded pension plan of WCI Steel Inc. of Warren, Ohio. WCI Steel's corporate parent, The Renco Group Inc., has agreed to assume sponsorship of the plan, avoiding a loss of $94 million to the pension insurance program and sparing WCI workers from benefit reductions.
As a result, the agency will withdraw the enforcement action it filed Feb. 3 in US District Court in Youngstown, Ohio.
"Renco's decision to assume sponsorship of this pension plan achieves the outcome that is in the best interest of all stakeholders," said PBGC Executive Director Brad Belt. "Whenever possible the PBGC will use the tools at its disposal to prevent unnecessary plan terminations."
The PBGC's preventive action was based on provisions of federal pension law that provide that members of a corporate "controlled group" are responsible for the pension liabilities of other group members. Under the proposed plan of reorganization filed in federal bankruptcy court, the pension plan would have been left behind by the reorganizing steelmaker. Because the PBGC acted before the controlled group was broken up by confirmation of the reorganization plan, Renco remained responsible for WCI's pension obligations.
The federal bankruptcy court in Akron, Ohio, today confirmed WCI's modified plan of reorganization, which includes Renco's agreement to assume the pension plan. As part of a negotiated settlement, the reorganized WCI agreed to contribute $15.3 million to the plan upon the steelmaker's emergence from Chapter 11 and, subject to certain conditions, another $5 million in each of the next two years. As plan sponsor, Renco will be responsible for paying all future contributions to the plan.
The WCI pension plan covers about 2,000 workers and retirees.
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 over 30,000 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 investment returns.
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PBGC No. 06-35