>However, the Pension Benefit Guaranty Corporation (PBGC) said it would gladly step aside from its efforts to take over the Rouge Steel plans if a suitable buyer came forward for the Dearborn, Michigan carbon steel producer’s assets that was willing to assume the firm’s pension responsibilities.
>The PBGC said Wednesday that it was filing suit in US District Court asking a judge to terminate the four Rouge plans covering 5,400 workers. The plans are 53% funded, with $140 million in assets to cover $264 million in benefit liabilities. Of the $124 million in total underfunding, the PBGC estimates that it will be liable for about $84 million. The PBGC said it also could get hit with another $11-million loss for unfunded severance-type benefits if the pension plans are not terminated before an asset sale. The PBGC said it would suggest a judge terminate the plans as of Thursday.
“The PBGC is initiating this action as a protective measure,” said PBGC Executive Director Steven Kandarian, in a statement. “We believe these pension plans are affordable, and if an asset purchaser stepped forward to assume the plans, the PBGC would withdraw its notice of intent to terminate.”
>Rouge Steel turned to a US Bankruptcy Court for protection from its creditors on October 23, 2003. The bankruptcy court will consider on December 22 a proposal to sell the company’s assets to Russian steelmaker OAO SeverStal, which stated in its asset purchase agreement that it will not assume the pension plans.
>When the PBGC assumes responsibility for a plan, it makes benefit payments to beneficiaries according to federal guidelines. Created by ERISA, the agency currently guarantees pension payments for about 44 million American workers and retirees participating in over 32,500 private-sector defined benefit pension plans.
>PBGC officials have said repeatedly that the federal private pension insurance program has been the hardest hit by failed or failing plans from several sectors including airlines and steelmakers (See Steel, Airlines Weigh on PBGC ).
For more information about the PBGC, go to www.pbgc.com .
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