Compliance January 19, 2007

PBGC Takes Four Kaiser Plans with $9.5M Deficit

January 19, 2007 (PLANSPONSOR.com) - The nation's private-sector pension insurer has taken responsibility for four pension funds covering almost 900 current and former employees of Kaiser Aluminum & Chemical Co.
Reported by

A news release from the Pension Benefit Guaranty Corporation (PBGC) said it became trustee of the plans on December 29, 2006. Kaiser Aluminum is a subsidiary of Kaiser Aluminum Corp.

According to the agency announcement, it assumed the plans after a federal appellate court affirmed a lower court ruling that upheld a bankruptcy court which found that the company satisfied the legal test for terminating the plans (See

Appeals Court Mandates Aggregate Consideration of Failing Pension Programs ).

The four Kaiser pension plans, which terminated on October 10, 2006, are the Bellwood Plan, the Los Angeles Extrusion Plan, the Sherman Plan and the Tulsa Plan.

Together, they have assets of $20.1 million to cover promised benefits totaling $29.6 million, according to PBGC estimates. The agency expects to be liable for $2.7 million of the $9.5 million shortfall.

Under federal pension law, the maximum guaranteed pension at age 65 for participants in plans that terminated in 2006 is $47,659 per year. The maximum guaranteed amount is lower for those who retire earlier or elect survivor benefits. In addition, certain early retirement subsidies and benefit increases made within the past five years may not be fully guaranteed.

 

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