Just last week the PBGC picked up four pension plans of bankrupt steel bar manufacturer Republic Technologies International. The Ohio-based firm’s four pension plans, which cover some 6,200 workers (including 2,000 retirees) are underfunded by a total of $310 million, according to the PBGC (see PBGC Picks Up Another Steel Casualty ).
The most recent pickup by the PBGC are the plans sponsored by ABC-NACO, Inc., and its subsidiary, National Castings, Inc., a Lombard, Illinois.-based manufacturer of steel rail products, which filed for bankruptcy last October.
The two plans taken over by PBGC are:
- the Keokuk Steel Castings, Inc.-National Castings, Inc. Merged Pension Plan for Hourly Employees
- the ABC Rail Products Corp. Retirement and Disability Pension Plan.
With combined assets of about $24 million and benefit liabilities of $36 million, the plans are underfunded by almost $12 million, according to agency estimates. PBGC will use its insurance funds to make up the shortfall and guarantee to pay benefits as promised by the plans, up to the maximum allowed by law.
Both plans terminated as of January 12, 2002.
Separately, as part of a transaction approved by a bankruptcy court on May 23, 2002, Matrix Metals, Inc. will become responsible for the pensions of almost 700 former ABC and National Castings workers at plants in Keokuk, Iowa and Baltimore, Maryland.
A Troubled Industry
Officials of the beleaguered steel industry have complained for months about the burdens of maintaining retiree health and pension benefits with their business in a slump.
In addition to the PBGC’s stepping in with cases like ABC-NACO, Inc, lawmakers have been discussing possible industry bailouts (See PA Rep. Proposes Steel Benefit Fund ).
The PBCG was created under ERISA to guarantee pension benefit payments about 44 million American workers and retirees participating in over 35,000 private-sector defined benefit pension plans. The agency is funded by insurance payments paid by companies sponsoring the pension plans and by PBGCs investment returns.
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 those retiring at age 65.
Maximum guarantees are adjusted for retirees older or younger than age 65 and for those who choose survivor benefits.