The Pension Benefit Guaranty Corporation (PBGC) has reached a settlement with United Airlines over the termination of the company’s pension plans.
“We believe that this agreement, under the circumstances, is in the best interests of the pension insurance program and its stakeholders,” said PBGC Executive Director Bradley D. Belt. “The PBGC has an obligation to reduce its losses for the protection of workers and retirees, other companies that pay insurance premiums, and taxpayers. By reaching a settlement now, we further that goal.”
In the agreement, which still has to be approved by the bankruptcy court, the PBGC would terminate and become trustee of the company’s four pension plans and the agency’s claims against the company would be settled.
An Assoicated Press article says, “A settlement likely would speed transferal of the pension plans to the government pension agency, thus reducing some benefits to employees. But United’s unions remain opposed to the plans being scrapped, and Judge Eugene Wedoff must first approve the agreement.”
As of September 30, 2004, the PBGC’s own balance sheet showed a $23.3 billion deficit, with $39 billion in assets to pay $62.3 billion in guaranteed pension benefits to more than 1 million workers and retirees. By law, the PBGC is required to keep premiums as low as possible and has no call on the U.S. Treasury beyond a $100 million line of credit.
“This again highlights the need for the comprehensive pension reform. Unless and until Congress fixes the rules that allow pension plans to become so underfunded, the insurance program and plan participants are at risk of suffering large financial losses,” Belt said.
Chris is a staff writer for Murdok. Visit Murdok for the latest ebusiness news.
