US Department of Labor (DoL) Secretary Elaine Chao announced Tuesday that an independent fiduciary will be appointed to represent the interest of the participants and beneficiaries in United Airlines’ four pension plans.Under the terms of an agreement, between the DoL and the airline, the independent fiduciary will be selected by the company, subject to the approval of the department and will be responsible for pension funding issues.
The agreement authorizes the fiduciary to:
- review the funding policy of the plans
- assert claims
- file lawsuits about the plans’ funding and the company’s contributions.
In June, the airline’s Board of Directors changed the structure for managing its retirement plans by eliminating the plans’ administrative committee and appointing UAL, the parent company, as the sole plan fiduciary. On July 15, UAL did not make a required $72 million contribution to three of the plans, claiming its bankruptcy financing prohibited it from doing so. (See United Skipping Fall Pension Payment ).
In a move that prompted a considerable ramp up of federal officials’ pressure, the company announced July 23 that it would not make any of its legally and contractually required contributions to the plans while still in bankruptcy. That’s when Bradley Belt, executive director of the Pension Benefit Guaranty Corporation (PBGC), formally demanded information from the company on how it would make up the shortfall (SeePBGC to United Air Lines: Show Us You Can Pay Your Pension Bills ).
Another payment of $400 million is due on September 15. Under the department’s agreement, UAL must have an independent fiduciary in place prior to September 15, according to Tuesday’s DoL announcement.
UAL sponsors four plans covering nearly 120,000 employees. The company filed for Chapter 11 bankruptcy on Dec. 9, 2002.