In an announcement, the USAPA asserted that the PBGC breached its fiduciary duty to the fund and its thousands of beneficiaries by failing to comply with its duties required under the Employee Retirement Income Security Act (ERISA). The pilots union said PBGC has refused to investigate suspected mismanagement of the pension plan.
The suit requests that the U.S. District Court for the District of Columbia immediately appoint and empower another trustee of the Retirement Income Plan for Pilots of US Airways Inc. to perform the statutory and fiduciary duties required under ERISA and to investigate the plan’s financial affairs.
“The PBGC has not fulfilled its obligation as trustee of our pilots’ retirement fund,” said Captain Mike Cleary, president of USAPA, in the announcement. “Our own investigation has uncovered a number of questionable circumstances surrounding activities and investments of our retirement fund prior to its termination. Our request to the PBGC for a thorough investigation has fallen on deaf ears, so we are asking the court to appoint a trustee who will do its due diligence in this matter and investigate the management, or perhaps the mismanagement, of our pilots’ retirement fund.”
The PBGC assumed control of the pilots’ pension plan on March 31, 2003, when US Airways terminated the plan during its bankruptcy proceedings (see PBGC Assumes US Airways Pension Plan ).
The PBGC took over three more pension plans in February 2005, making way for the airline to emerge from bankruptcy (see PBGC Takes Over Three US Airways Pension Plans at $2.3B Cost ).
In January 2007, a group of U.S. Senators urged the agency to give some responsibility for the pension liabilities back to US Airways after the airline reported a $292 million profit over the first three quarters of 2006 (see Senators Ask PBGC to Return Some US Airways Pension Liabilities ). Following the request, the PBGC sold stock it had obtained when it took over the airline’s pensions, with the proceeds used to pay benefits to retired pilots, flight attendants, and other employees (see PBGC Sells 4.87M Shares of US Airways Stock ).
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