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Compliance June 24, 2005
Law to Prohibit Default of United's Pension Plans Clears the US House
June 24, 2005 (PLANSPONSOR.com) - A measure approved
by the US House of Representatives says that United Airlines
will not be allowed to default on remaining pension plans,
relying on the Pension Benefit Guaranty Corporation (PBGC) to
assume $6 billion in liabilities.
Reported by PS
The House passed by a vote of 219 – 185 a measure that will prevent the default of United’s four large defined benefit (DB) plans. The PBGC has already taken on a United plan covering ground workers and will assume responsibility for two more plans by the end of the month, according to a Reuters report.
PBGC and United entered an agreement that would decrease pension benefits 30% to 60% for around 120,000 workers (See United Pension Hearing Delayed, But Okayed By Court ). A news release distributed Friday quoted Representative Stephanie Tubbs Jones (D-Ohio) , one of the supporters of the bill, as saying, “Why should the employees suffer when they have played by the rules while the company and the PBGC have gone behind their backs and moved the bases?”
California Representative George Miller, a Democrat who sponsored the amendment to a spending bill, and other Democratic supporters, fear other struggling airlines will follow United’s lead, dumping billions more in pension liabilities on the PBGC, making it necessary for taxpayers to bail out the agency, according to the news report.
Reuters also indicated that some are worried about the collapse of the PBGC which is already $23 billion in the red.The United bill still requires approval of the US Senate.
-Rebecca Moore