>The Huntington, West Virginia facility’s three plans – Inco Alloys International Inc. Retirement Plan for Hourly Employees, Pension Plan for Hourly Employees of Special Metals Corp., and Special Metals Corp. Salaried Employees Pension Plan – have only $144 million in assets to cover $299 million in liabilities Of the $155 million in total underfunding, the Pension Benefit Guaranty Corporation (PBGC) estimates it will be liable for approximately $129 million, according to a news release.
>Special Metals is transferring the pension liabilities to the PBGC under the “distress termination” provisions of federal pension law, which allow companies to shed their pension obligations if such a step is necessary to emerge from bankruptcy. In the case of Special Metals, the exit lender would not provide financing unless the plans were terminated.
“The PBGC is stepping in because Special Metals and its affiliates meet the legal criteria for transferring these three pension plans to the federal pension insurance program,” said PBGC Executive Director Steven Kandarian (See Steve Kandarian ) . “Retirees will continue to receive their monthly benefit checks without interruption, up to guaranteed federal limits, and other employees will receive benefits when they are eligible to retire.”
Once the PBGC becomes trustee of Special Metals’ pension plans, retirees will continue to receive their monthly benefit checks without interruption up to guaranteed federal limits. Other employees will receive benefits when they are eligible to retire. Federal guidelines call for workers in plans that terminate in 2003 to receive $3,664 a month (or $43,977 a year) for workers retiring at age 65. Maximum guarantees are adjusted for retirees older or younger than age 65 and for those who choose survivor benefits.
The PBGC, created by ERISA to guarantee private-sector pension benefits, currently backs pension benefits for about 44 million American workers and retirees participating in over 32,500 private sector defined benefit pension plans. The agency is financed by insurance premiums.