>The Pension Benefit Guaranty Corp. (PBGC) said it would assume responsibility for the plan covering almost 1,300 workers and retirees of Thunderbird Mining Co. of Eveleth, Minnesota. Thunderbird is a subsidiary of the bankrupt Eveleth Mines LLC (Evtac), which produces taconite pellets used in the manufacture of iron and steel. Evtac is jointly owned by three major North American steelmakers, Rouge Steel, AK Steel, and Stelco.
>According to the PBGC, the Thunderbird Mining Co. Pension Plan has about $65 million in assets to cover more than $126 million in benefit liabilities. Of the approximately $61 million in total underfunding, the PBGC estimates that it will be liable for about $37 million.
>The Thunderbird plan is the latest in a long and substantive string of steel industry plans the agency has had to take over. In fact, since 1974, the steel industry has accounted for 58% of all claims against the pension insurance program but less than 3% of covered workers. Over the past two years, the PBGC has incurred more than $8 billion in steel company plan liabilities, including plans from Bethlehem Steel, LTV Steel, National Steel, Acme Metals, CSC Steel, GS Industries, and Empire Specialty Steel (See Steel, Airlines Weigh on PBGC ).
>Under federal pension law, the maximum pension guaranteed for workers in plans that end in 2003 is $3,664 a month (or $43,977 a year) for persons retiring at age 65. Maximum guarantees are adjusted for retirees older or younger than age 65 and for those who choose survivor benefits. In addition, benefit increases made within the last five years and certain supplemental benefits are not fully guaranteed.
>The PBGC insures private sector defined benefit pensions – moving to take over plans from ailing or bankrupt companies to continue benefits to retirees and beneficiaries. The agency gets funding from insurance premiums paid by covered companies and investment income.
PBGC Labeled ‘High Risk’
>Lately, that’s been a particularly difficult business. The US General Accounting Office (GAO) announced Wednesday that it has a critical eye on the PBGC after designating the federal agency “high risk” (See GAO Designates PBGC ‘High Risk’).
With the designation, the GAO has now grouped the PBGC into its assembly of federal agencies “that need urgent attention and transformation to ensure that our national government functions in the most economical, efficient and effective manner possible,” according to the GAO news release. Typically, the agencies with the “high risk” label receive greater attention from GAO and are assessed in regular biennial reports.