Spokesman Jeffrey Speicher told PLANSPONSOR.com that the PBGC has already taken over the plans of the two largest steel manufacturers, Pennsylvania-based Bethlehem Steel and Cleveland-based LTV Corp. He estimated that the pension liabilities between the two companies amount to $4 billion.
“Our program does not work so that we would take all of the pension plans at one time,” he said. “Obviously if Congress were to come to such an agreement and make a change through legislation something would happen. But, under ERISA this has never happened.”
Still, Speicher said that the PBGC has a program called the multi-employer program that allows numerous plans to be insured at the same time. But, he said the 2000 plans currently covered through the program are mostly union plans. He also said that should the remaining steel companies fall through, each would be evaluated on an individual basis and insured accordingly.
Speicher also suggested that the steel industry’s biggest challenge regarding its legacy costs is found in the health benefit provisions. Indeed, legislation introduced earlier this year by Peter Visclosky (D-Indiana) tackles mostly health benefits and is slim on pension provisions.
Titled the Steel Revitalization Act of 2001 (HR 808), the bill aims to grant steel companies $2.4 billion over the next three years to pay 80% of the health benefits promised to retirees.
In particular, the bill seeks to set up a “Steelworker Retiree Health Care Fund” to be administered by the Steelworker Retiree Health Care Board at the Department of Labor. To raise money to deposit into the fund, the bill hopes to place a 1.5% surcharge on the sale of all steel products in the US, both imported and domestic.
Under this provision, the new fund will be accessible to all steel companies that provide health insurance to retirees. However, companies will have to apply to the Board on a yearly basis for funding to cover up to 75% of their health care costs.
While the Steel Revitalization Act has 226 co-sponsors between the Democratic and Republican parties, and support from most of the House of Representatives, Republican leaders have blocked it from reaching the floor.
An aide in Visclosky’s office, Peter Maarberg, told PLANSPONSOR.com that he does not expect it to reach the floor before next year.
However, Marco Trbovich, a spokesperson for the United Steel Workers Association (USWA), said the group thinks the legislation will clear the way for consolidation in the industry by relieving steel companies of the weight of legacy costs.