DoL Investigating Possible Northwest ERISA Violations

March 15, 2006 ( - The US Department of Labor (DoL) is looking into actions by Northwest Airlines leading to the collapse of its pension funds.

The New York Times reports that DoL officials said the investigation was a civil matter relating to funding and participant and regulator disclosure provisions in pension law.   They said the investigation was also looking into whether pension plan administrators had fulfilled their fiduciary duties.

Northwest received a waiver from the Internal Revenue Service in 2003, allowing it to reschedule that year’s pension contributions over five years. The airline has been looking for additional ways to reduce or postpone its contributions for subsequent years.   Now that some of the delayed contributions are starting to come due, the airline has been lobbying Congress to give it still more time.

In January, the Department subpoenaed information about its pension plans, its business reorganization and general operations in order to investigate whether there had been a violation of the Employee Retirement Income Security Act (ERISA) (See  Report: DoL Ready to Sue Over Northwest Airlines Documents).

The airlines has turned over some of the documents, but is scheduled to appear in court to argue for a protective order to keep some documents confidential, the New York Times said.   Northwest’s motion for the protective order states that full cooperation could “threaten or undermine” its ability to reorganize in bankruptcy.   The company has agreed to cooperate fully if the government gave it guarantees that confidential financial information would be kept private and not used “as leverage to pressure” it.

Northwest’s pension funds include individual plans for about 8,000 pilots, 9,000 salaried employees and 52,000 unionized workers, including mechanics and agents. At the end of 2004, the plans owed a total of $9.2 billion to their participants but had assets of $5.4 billion.