Bradley Belt, executive director of the Pension Benefit Guaranty Corporation (PBGC), made the demand for information in a letter to Glenn Tilton, chairman, president and chief executive officer of UAL’s United Air Lines.
Belt said alarm bells were going off at the PBGC, the nation’s private pension insurer, when the company didn’t make $72.4 million in required pension payments last week. “This decision to stop contributing to the pension plans is a serious matter that increases the risk of loss to plan participants and the federal pension insurance program,” Belt wrote in the Tilton letter.
UAL officials also announced that their debtor-in-possession finance would “effectively” bar the company from making any more pension payments until its reorganizes and exits US Bankruptcy Court. Belt insisted that any such requirements would be illegal because they would conflict with federal tax law and the Employee Retirement Security Act (ERISA).
Asserting that the company owes more than $500 million in pension payments for 2004 and more than $4 billion over the next five years, Belt demanded of Tilton: “please provide a detailed explanation of how the company’s business plan will enable it to meet those obligations. On the other hand, if UAL intends to terminate any of its defined benefit pension plans, the PBGC and plan participants should be made aware of that fact as soon as possible.”