RG Steel Pension Restoration
Frequently Asked Questions (FAQs)
What does it mean to "restore" a pension plan?
Restoration means that PBGC returns the plan to the former plan sponsor, the employer, as an ongoing pension plan. After the plan is restored, the sponsor assumes responsibility for paying current and future retirees their benefits, and those benefits are no longer subject to the legal limits on what PBGC may pay.
Why is PBGC restoring the RG Steel pension plans?
PBGC is restoring the RG Steel pension plans as part of a settlement that resolved a lawsuit PBGC filed against The Renco Group, Inc. to hold it responsible for the two RG Steel pension plans. These plans are the RG Steel Warren, LLC Hourly Employees Pension Plan (Hourly Plan) and the RG Steel Wheeling, LLC Pension Plan (Salaried Plan). Renco was the parent company of RG Steel. Under the settlement, PBGC will restore the Hourly Plan and the Salaried Plan to RG Steel. But because RG Steel has liquidated in bankruptcy, the settlement provides that Renco will then take control of the two plans and become the plans' sponsor and administrator. This means that Renco will be responsible for funding the plans, managing the plans in compliance with the settlement agreement and ERISA, and paying all plan benefits.
When will PBGC restore the RG Steel pension plans?
PBGC will restore the plans on June 1, 2016. PBGC and Renco can extend the June 1 date if they need more time to ensure a smooth transfer of the plans. PBGC will notify participants if the June 1 date is extended.
Will PBGC continue to protect the RG Steel pension plans after the restoration?
Yes. PBGC's insurance program will continue to protect the RG Steel pension plans after the restoration.
When will retirees receive their last payment from PBGC?
Retirees will receive their last payment from PBGC on June 1, 2016, and their first payment from the plan, under Renco's administration, on July 1, 2016. June 1 and July 1 payments will be for the same amount.
When will retirees' benefits be increased after the restoration?
By September 1, 2016, each RG Steel pension plan will resume paying full benefits to any retiree who has been receiving reduced benefits because of the PBGC guarantee limits.
Will the RG Steel pension plans make a catchup payment for any benefit reductions because of the PBGC guarantee limits?
Yes. By September 1, 2016, each RG Steel pension plan will make a backpayment, with interest, to any retiree who has been receiving reduced benefits because of the PBGC guarantee limits.
Can retirees change the election of their benefit form (for example, a lifetime annuity with a survivor benefit for the retiree's spouse) after the restoration?
No. Retirees who currently receive benefits from one of the RG Steel pension plans cannot change their benefit election after the restoration. These retirees will continue to receive pension benefits in the form they elected.
Questions 9-16 relate only to the Hourly Plan
What is a non-level benefit?
It is a benefit form under which a retiree may elect to receive a larger benefit in the early years of his or her retirement and a smaller benefit later. These forms were available to participants in the Hourly Plan who also have benefits from a plan sponsored by WCI Steel or LTV Steel. Because benefits from the other plans are payable starting at a later age, the Hourly Plan allowed retirees to choose to receive higher benefits early on. Once benefits from the other plan began, the Hourly Plan benefit would be reduced. However, because of legal limits that affect poorly funded plans like the Hourly Plan, the Hourly Plan was no longer able to offer benefit forms that pay a non-level benefit. After PBGC took over the Hourly Plan, non-level benefit forms continued to be unavailable.
If a retiree was unable to receive a non-level benefit, will this change after the restoration?
No. Retired participants who were unable to receive a non-level benefit from the Hourly Plan will continue to receive their benefits in the level form after the restoration. That is because the legal limits on non-level benefits apply to all underfunded plans, not just plans taken over by PBGC, and benefits remain in that level form after payment begins.
Shutdown Benefits (Questions 11-16)
What are shutdown benefits?
Shutdown benefits are early retirement benefits payable to certain participants when a company, or a plant, shuts down its operations. The Hourly Plan provided shutdown benefits to participants who had reached certain age and service milestones (under the plan's "Rule of 65" or "70/80" provisions) and whose employment terminated because RG Steel Warren shut down its operations. The Salaried Plan did not provide shutdown benefits.
Has PBGC paid any shutdown benefits?
No. PBGC has not paid any shutdown benefits, because of the PBGC guarantee limits.
How will shutdown benefits be affected by the restoration?
All shutdown benefits promised under the Hourly Plan will be paid as a result of the restoration, but some participants will get them sooner than others, depending on when the participant's employment terminated.
When will shutdown benefits be paid to eligible participants whose employment terminated on or before June 11, 2012?
Shutdown benefits for participants whose employment terminated on or before June 11, 2012, will be paid beginning on September 1, 2016. (Participants who are not yet receiving a pension will need to file a benefit application; the Hourly Plan will send benefit applications to these participants.) The Hourly Plan will also make backpayments, with interest, to these participants on or soon after September 1, 2016, for the shutdown benefits that they did not receive between the time their employment terminated and the time the Plan begins paying these shutdown benefits.
When will shutdown benefits be paid to participants whose employment terminated after June 11, 2012?
Shutdown benefits for participants whose employment terminated after June 11, 2012, will be paid beginning four years after the restoration. At that time, the Hourly Plan will also pay a backpayment, with interest, for the shutdown benefits that these participants did not receive between the time their employment terminated and the time the Plan begins paying these shutdown benefits.
Why does June 11, 2012, make such a big difference for the payment of shutdown benefits?
It has to do with legal limits that apply to poorly funded plans like the Hourly Plan. Under the law, shutdown benefits may not be paid if those benefits (in addition to shutdown benefits triggered by earlier layoffs) would reduce the plan's funded status below 60%. (The "funded status" refers to how much money the plan has in comparison to the promised benefits.) The Hourly Plan's funded status was above 60% until June 11, 2012, taking into account all shutdown benefits for employees terminated through that date. But the funded status dropped below 60% after June 11, 2012, taking into account the additional shutdown benefits for employees terminated after that date. Therefore, the shutdown benefits for employees whose employment terminated after June 11, 2012, could not be paid, as a matter of law. Even if PBGC had won the lawsuit against Renco and had collected a full recovery, PBGC could not have paid these post-June 11, 2012 shutdown benefits. Under the settlement, Renco has nevertheless agreed to pay these shutdown benefits, but the settlement gives Renco four years to fund the Hourly Plan to a level that, under the law, will permit these benefits to be paid.
How can retirees get more information?
For questions about benefits and the restoration, call the customer contact center toll-free at 800-400-7242 or visit www.pbgc.gov.
TTY/ASCII users may call the Federal Relay Service toll-free at 800-877-8339 and ask to be connected to 800-400-7242.
Representantes que hablan español están dispuestos a ayudarle en nuestro Centro de Contacto del Cliente: 1-800-400-7242.