Court Dismisses Allegations by Former Pan Am Employees
FOR IMMEDIATE RELEASE
November 26, 1997
A U.S. District Court today dismissed allegations by a group of former employees of the defunct Pan American World Airways who sought to remove PBGC as trustee of the airline's underfunded pension plans. The only allegation that the Court left open concerns the timeliness of PBGC's notice of benefits to Pan Am participants.
In making her ruling, Judge Loretta Preska of the U.S. District Court for the Southern District of New York, noted that there were no allegations that "estimated benefits are not being paid or that the amounts of estimated benefits that are being paid are incorrect."
"We are pleased that the court has recognized PBGC's important role in protecting the pensions of 34,000 former Pan Am workers and retirees. We are paying timely benefits to everyone who retires and moving ahead steadily to inform all Pan Am participants of their benefits under the insurance program," said PBGC Executive Director David M. Strauss.
When Pan Am shut down, PBGC took responsibility for three pension plans that were underfunded by nearly $1 billion. PBGC immediately began paying benefits to retirees without interruption and pays over $100 million annually to 14,000 retirees. Because of PBGC's insurance program, over 95% of Pan Am employees will receive all of their pension benefits.
Everyone is being paid timely benefits when they retire, and PBGC is in the process of completing final notification of benefits for all employees. PBGC has overcome the difficulties due to the poor condition of records and the prolonged bankruptcy process. About 17,000 workers and retirees, half of the participants in the Pan Am's plans, have already received notification of their benefits.
PBGC is a federal agency created by the Employee Retirement Income Security Act of 1974 to guarantee payment of basic pension benefits earned by workers. It covers some 42 million American workers and retirees participating in about 50,000 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. 98-07