The Fort Wayne, Indiana Specialty Alloys facility’s two plans – the Slater Steels Fort Wayne Specialty Alloys Division United Steelworkers of America Pension Plan and the Slater Steels Fort Wayne Specialty Alloys Division Salaried Employees Pension Plan – have only $40 million in assets to cover $76 million in benefit liabilities. Of the $36 million in total underfunding, the Pension Benefit Guaranty Corporation (PBGC) estimates that it will be liable for about $29 million, according to a news release.
Once the PBGC becomes trustee of Slater Steels’ pension plans, retirees will continue to receive their monthly benefit checks without interruption up to guaranteed federal limits. Other employees will receive benefits when they are eligible to retire. Federal guidelines call for workers in plans that terminate in 2002 to receive $3,664 a month (or $43,977 a year) for workers retiring at age 65. Maximum guarantees are adjusted for retirees older or younger than age 65 and for those who choose survivor benefits.
The assumption of Slater Steels’ plans will only add to the burden the PBGC is currently under from the steady stream of pension plans the agency’s has been forced to assume control of, including Weirton Steel’s plan just last month (See PBGC Assumes Weirton Steel Plan ). PBGC officials have repeatedly indicated that the steel plans have made an enormous dent in the agency’s finances (See PBGC Head Paints Gloomy Picture for 2003 – and Beyond). In aggregate, the agency reported an unaudited deficit of $8.8 billion as of August 31, 2003 (See PBGC: Deficit Now Stands at $5.7 Billion).
The PBGC, created by ERISA to guarantee private-sector pension benefits, currently backs pension benefits for about 44 million American workers and retirees participating in over 32,500 private sector defined benefit pension plans. The agency is financed by insurance premiums from covered companies and investment income.