The Pension Benefit Guaranty Corporation has announced it will assume responsibility for the pensions of more than 51,000 flight employees of US Airways, the bankrupt air carrier based in Virginia, US. The estimated cost to the pension insurance program is $2.3 billion, in addition to the $726 million claim from the US Airways’ pilots plan in 2003. The total claim of $3 billion is the second largest in the history of the pension insurance program, after Bethlehem Steel at $3.7 billion.
?The PBGC will protect the pension benefits of US Airways’ workers and retirees,? said Executive Director Bradley Belt. ?But the pension safety net is badly frayed. The Administration has put forward a comprehensive proposal that requires companies to pay for their promises, strengthens the insurance backstop, and sheds light on plan finances. We look forward to working with Congress to enact these reforms promptly.?
US Airways retirees will continue to receive their monthly benefit checks without interruption, and other workers will receive their pension when eligible to retire. Under federal pension law, the maximum guaranteed pension at age 65 for participants in plans that terminate in 2005 is $45,613 per year. The maximum guaranteed amount is lower for those who retire earlier or elect survivor benefits. In addition, certain early retirement subsidies and benefit
The PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974. It currently guarantees payment of basic pension benefits earned by 44 million American workers and retirees participating in over 31,000 private-sector defined benefit pension plans. The agency receives no funds from general tax revenues. Operations are financed largely by insurance premiums paid by companies that sponsor pension plans and by investment returns.
