Tuesday, December 17, 2002
Steel companies account for more than half of all pension plans taken over by the government.
WASHINGTON (AP) -- The government's pension insurance program is seeking control of Bethlehem Steel Corp.'s underfunded retirement plan in what would be the largest such takeover in the agency's history.
The Pension Benefit Guaranty Corp. estimates that Bethlehem Steel's pension plan, which covers 95,000 workers and retirees, is underfunded by $4.3 billion, or 55 percent.
The PBGC is proposing to terminate the pension plan Wednesday and to assume responsibility for benefits earned to that date, subject to legal limits.
"The PBGC is moving to protect the basic pension benefits of Bethlehem's workers and retirees because the company can no longer afford to maintain its pension plan," said Executive Director Steven A. Kandarian.
"To safeguard the pension insurance system that protects millions of Americans, we had to act now to prevent even larger losses down the road."
Bethlehem Steel, based in Bethlehem, Pa., filed for bankruptcy protection in October 2001.
With the assumption of the Bethlehem pension plan, the steel industry accounts for more than half of all of PBGC's claims but only 2 percent of covered workers.
Since October 2001, the agency has absorbed more than $6 billion in claims from steel companies.
Before Bethlehem, the largest claim was in March, when the agency assumed $1.6 billion in pension liabilities from LTV Steel Corp.
The government corporation is financed largely from insurance premiums paid by companies that sponsor pension plans and by the PBGC's investment returns.
Participants of a plan taken over by the program receive, on average, about 94 percent of benefits they had earned.