The “follow-on” pension proposal consists of a tax-qualified basic defined contribution plan and a supplemental, non-qualified defined contribution plan. Further details of the agreement provide the benefits and contributions will not be increased and a new defined benefit plan will not be created between now and the end of 2008, according to a news release.
However, the accord reached between the airline and union ultimately hinged on the agency’s determination not to object; an action that has now been taken.
Additionally, consistent with an earlier decision by the bankruptcy court, the PBGC approved US Airways’ application for a distress termination of the pilots’ pension plan, signaling the takeover by the agency of the company’s old pension plan. With the agency’s assumption of the previous plan, many US Airways pilots will receive a benefit higher than the standard PBGC maximum guarantee for their age, the agency said earlier (See Pension Deal OK Could Clear US Airways Bankruptcy Path ).