By filing its notice of determination to terminate four of Enron’s defined benefit pension plans, the Pension Benefit Guaranty Corp (PBGC) further finalizes its claim against the company for the underfunding, the agency announced Thursday. By doing so, the agency helps preserve assets that might otherwise be siphoned off by the bankrupt company to compensate other creditors.
PBGC officials said the company’s U.S. Bankruptcy Court reorganization plan makes “inadequate” provision for either maintaining the Enron defined benefit pension plans or placing the pension obligations with a private sector insurance company. “After confirmation (by the court), the plans would be left behind with a liquidating trust that is paying out all of its assets to other creditors,” the agency warned in its announcement.
The Enron plans covered in the PBGC’s latest action, which have about 17,000 participants collectively, include the:
- Enron Corp. Cash Balance Plan
- Garden State Paper Pension Plan
- Enron Financial Services Pension Plan
- San Juan Gas Company Pension Plan.
“The procedural step PBGC is taking today is designed to ensure that enough money remains available to fully protect the pensions of Enron’s workers and retirees,” PBGC Executive Director Bradley Belt said in a news release. “Acting now preserves assets that Enron can use to pay a private insurance company to take over its pension plans, which would provide full benefits and preserve the option to receive lump-sum payments.”