LTV Dumps Pension Liability on PBGC

March 29, 2002 ( - The Pension Benefit Guaranty Corporation (PBGC) will assume control of beleaguered steel company LTV Corp.'s underfunded retirement plans, which will be terminated on Sunday.

The three plans, with combined assets of $2.2billion, and liabilities of $4.4 billion, according to PBGC estimates, cover 82,000 workers – including 53,000 retirees – of the steel manufacturer.

The following plans will terminate this weekend:

  • the LTV Steel Hourly Pension Plan, covers about 65,000 participants and is underfunded by close to $1.8 billion,
  • the LTV Steel Salaried Defined Benefit Retirement Plan has over 14,000 participants and is underfunded by around $316 million, and 
  • the LTV Steel Mining Co. Pension Plan, which has 3,500 participants, is underfunded by roughly $70 million

Thanks to the PBGC bailout, the largest ever, monthly checks to retirees will continue. According to a PBGC spokesman, most LTV plan participants will receive their full basic pension, although federal law does limit the maximum benefit payable.

Under federal law, the 2002 maximum guaranteed benefit for workers retiring at age 65 is $3,579.55 a month or $42,954.60 per annum. Maximum guarantees are adjusted for retirees older or younger than age 65 and for those who choose survivor benefits. PBGC estimates that most participants will receive their full benefit.

Additional Action

Separately, the government agency is preparing to take over the LTV Railroads Pension Plan, which covers close to 700 participants and underfunded by almost $2 million, the PBGC announced on its Web site. The takeover would come after LTV completes the sale of its financially sound, LTV Railroads unit.

Unaffected by PBGC actions are the pension plans covering current and former employees of LTV’s metal fabricating subsidiary, LTV Copperweld, which is still in operation, and the plans for employees of VP Buildings, a subsidiary which LTV sold last year.

LTV, which was the nation’s third-largest integrated steel company, filed for bankruptcy protection last December (see LTV Asks Court to OK Shutdown ).