The federal agency that guarantees employee pensions said yesterday it plans to assume responsibility for the pension payments of 36,000...
CHICAGO — The federal agency that guarantees employee pensions said yesterday it plans to assume responsibility for the pension payments of 36,000 United Airlines’ ground workers and retirees.
The Pension Benefit Guaranty Corp. (PBGC) said the pension fund for baggage handlers, ramp workers, mechanics and other ground-based personnel has $1.2 billion to cover $4.1 billion in promised payments. The agency, which filed its motion in U.S. district court yesterday, said it could guarantee $2.1 billion of the shortfall.
Depending on the employee, benefits would be reduced 20 to 50 percent from what they were promised by the bankrupt airline if the court appoints PBGC to take over the pension, according to International Association of Machinists and Aerospace Workers (IAM) vice president Robert Roach Jr.
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United has missed $363 million in payments to IAM’s pension since July, the pension agency said.
United repeatedly has said it must terminate and replace its pensions to save money to exit a 27-month bankruptcy.
“PBGC has taken this step … because United has failed to have any meaningful discussion that would avoid pension termination,” Roach said yesterday.
He said the union would meet with United and PBGC officials Monday to restate its position that “termination of the pension plan is not acceptable.”
United yesterday said it is studying the pension agency’s motion.
In January, PBGC moved to take over the pension plan for more than 14,000 active and retired pilots. The agency estimated it would be responsible for about $1.4 billion of the plan’s $2.9 billion in underfunded assets.
The pension agency, already saddled with a $23 billion deficit, moved to take over the IAM’s pension to avoid $227 million in benefit increases set to take effect in coming months. By filing the motion yesterday, the agency won’t have to pay any of that increase if it eventually takes over the plan.
“If the PBGC waits, the costs to the pension-insurance program are going to go up dramatically,” PBGC spokesman Randy Clerihue said.