>The Pension Benefit Guaranty Corporation (PBGC), which steps in to assume pension payout responsibilities when an employer is in financial trouble or in bankruptcy, said it would assume the burden of pensions of 5,000 salaried workers and retirees of Houston-based Kaiser Aluminum Corp. Kaiser is the nation’s third-largest aluminum producer with operations in 10 states and overseas.
>According to the PBGC, The Kaiser Aluminum Salaried Employees Retirement Plan is just 21% funded, with $71 million in assets to cover $339 million in benefit liabilities. Commented PBGC spokesman Jeffrey Speicher, “Twenty one percent is extraordinarily low.”
>Of the $268 million in total underfunding, the PBGC estimates that it will be liable for about $246 million. With $65 million in annual benefit payments, the plan is expected to run out of money in just over one year.
>PBGC officials said the Kaiser salaried plan permitted individuals to take their full benefit as a lump-sum payment at retirement – disbursing $77 million in lump sums in 2002. By December 31, 2002, plan assets had been depleted to the point that the plan failed to meet federal liquidity requirements, and lump sums were discontinued, the agency said.
>According to the PBGC, since the pension plan fell below the liquidity shortfall threshold, Kaiser Aluminum has failed to make required quarterly payments to bring the plan back to liquidity. The first such payment was due on January 15, 2003. One day earlier, on January 14, 2003, nine Kaiser Aluminum subsidiaries filed for bankruptcy protection, thereby preventing the PBGC from filing liens against them to cover the missed payment, the agency said.
“The PBGC is stepping in because Kaiser has missed tens of millions of dollars in legally required contributions to the pension plan and because the plan is so poorly funded that it will be unable to pay benefits when due,” said PBGC Executive Director Steven Kandarian.
>The Kaiser Aluminum Salaried Employees Retirement Plan will end as of December 17, 2003. Once the PBGC becomes trustee of the plan, 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. Seven other defined benefit plans sponsored by Kaiser Aluminum remain ongoing and are not affected by PBGC’s action.
>Information about PBGC’s pension insurance program is available at www.pbgc.gov .