The Pension Benefit Guaranty Corporation (PBGC) announced that is has stepped in to protect the pension benefits of more than 3,800 people who worked for Acme Metals, Inc., a bankrupt producer of steel and steel fabricated products based in Riverdale, Illinois.
The Consolidated Pension Plan for Acme Salaried and Hourly Employees, which was terminated as of June 1, 2002, is underfunded by about $170 million, according to PBGC estimates.
The agency will take over the plan’s assets and use PBGC insurance funds to pay the guaranteed pension benefits of covered workers. Workers and retirees do not need to take any action. Those who have questions may contact the PBGC Customer Service Center toll-free at 1-800-400-7242.
Missouri Mop Up
It’s been less than three weeks since the PBGC picked up
two pension plans underfunded by $44 million covering more
than 1,000 Missouri workers of GST Industries, a bankrupt
steel rod producer.
Under federal pension law, the maximum pension guaranteed for workers in plans that terminated in 2002 is $3,579 a month (or $42,954 a year) for persons retiring at age 65. Maximum guarantees are adjusted for retirees older or younger than age 65 and for those who choose survivor benefits, according to the PBGC.
Acme Packaging Corp., a subsidiary of Acme Metals, intends to remain ongoing and to continue two small pension plans, covering workers at facilities in Bay Point, California and New Britain, Connecticut.
Much of the US steel industry has been in financial straits lately, sending a number of steelmakers into bankruptcy – and their pension plan obligations to the PBGC, insurer of the nation’s private pension system, including LTV, Empire Steel, and Northwestern Steel.
Even prior to that, the steel industry had presented the PBGC with some of its largest liabilities on a historical basis and the large retiree pension and health liabilities continue to represent a financial challenge for the beleaguered industry.
In fact, PBGC officials blamed the steel industry’s rampant pension woes as one reason for the big chunk out of its cash surplus.
Created by ERISA, the PBGC guarantees basic pension payments for 44 million working Americans and retirees in 35,000 private defined benefit pensions. The agency gets funds from premiums paid by covered companies into its insurance program as well as investment returns.