Federal Agency Which Insures Private Pensions Shifted to Stocks Just Months Before the 2008 Collapse
“We wanted to know how much money we owe our retirees, and how much of that money we don’t have.” -Cook County Treasurer Maria Pappas (June 22, 2011)SHTFplan.com
June 29, 2011
We know the Federal and State governments are in serious fiscal trouble. Having overspent and over borrowed, they are now faced with the real prospect of having to reduce jobs, spending programs and retirement related benefits.
But the States and the Federal government are not alone.
During the boom times of entitlement spending and government largess leading up to the financial crisis, local governments that include cities and counties spent their share of forward earnings as well. And now those uncontrolled fiscal policies are coming home to roost.
For those Americans who have worked for decades with the hopes that their pensions, health care and other benefits would be there when they retire, we offer a glimpse into what the future may hold:
Cook County taxpayers are on the hook for a staggering amount of local debt, according to figures presented by Cook County Treasurer Maria Pappas today. Cook County’s numerous local governments face mounting debts totaling more than $108 billion. And, for the first time, specific figures have been collected for municipal unfunded pensions obligations totaling in excess of $25 billion, almost a quarter of debt countywide. The total figures translate into an average debt-per-household in the city of Chicago of $63,525, and $32,901 in the suburbs.
“We knew that debt and unfunded pension obligations were serious problems at the state and federal level and assumed that a similar pattern would follow at the local level. But, quite frankly, I was stunned by the depth of the crisis for local governments,” said Pappas.
“This goes well beyond big cities, where you expect financial challenges. These fiscal problems permeate townships, villages, school districts, park districts, fire protection districts and more, and the taxpayers are on the hook.”
Source: Cook County Treasure’s Office
Government employees may currently enjoy higher salaries and benefits than the private sector, but they have been given a false sense of security.
A single county, granted one of the largest in the country, is in hock for $108 billion dollars. That’s roughly 1/7 of the total TARP bailout given to banks in 2008. This is a very big number, indeed.
Whether you are a police officer, fireman, school teacher, or utility worker, you could have serious problems down the road.
While Ms. Pappas offerred some ideas to help reduce Cook County’s spending for the future, she provided no realistic solutions for dealing with the current deficit. The reason for this is obvious. There are no realistic solutions expect for either borrowing the money (and further indebting themselves with high interest) or reset by default.
In previous commentaries we’ve discussed the coming wave of State and local defaults, and it appears that the end game is close. Cook County is not alone, and chances are that every major metropolitan area in the country is heavily in the red. This means that the jobs and retirement futures of millions of people are under threat.
We’ll no doubt begin to hear about bailouts for States and counties in the near future, and if the Republicans and Democrats in Congress have their way, then blank checks are a foregone conclusion. The only other option will be for ex-Federal governments to start reducing benefits and firing workers. Politically, that is something our elected officials, even on the Federal level, are not going to want to deal with, so we are hard pressed to see a scenario where the Federal government lets these pensions go into default – essentially being wiped away. After all, they will do whatever it takes to prevent riots in the streets for as long as possible, even if this means kicking the can down the road for a couple more years and further compounding the problem (as has been the case thus far).
Like Greece, these governments will get the bailouts their hardworking employees deserve, only to saddle those counties and cities, as well as the entire nation, with even more debt.
Eventually, the Federal government will hit its (real) debt ceiling as well. That will happen when no one else but The Federal Reserve will buy the US Treasury’s debt issues, at which point the retirement accounts, 401k’s, savings and dollar denominated assets of every American will be completely and utterly destroyed.The wheels were already coming off by mid 2008, so the writing was on the wall. This shift from bonds to stocks was done KNOWING that there would be a major financial catastrophe and subsequent stock market collapse. This is Wall Street's way of looting and destroying the private pension system in order to pave the way for establishment of a national pension plan in addition to Social Security (ensuring we have both a national health care AND a national pension plan).
The Pension Benefit Guaranty Corporation (PBGC) is an independent agency of the United States government that was created by the Employee Retirement Income Security Act of 1974 (ERISA) to encourage the continuation and maintenance of voluntary private defined benefit pension plans. Charles E.F. Millard is the former Director of the PBGC [he ran the agency from May 2007 to January 2009]. He was the first-ever presidentially appointed, Senate-confirmed Director of the PBGC [the requirement of the US Senate's confirmation of the private pension insurer director post was part of the Pension Protection Act (PPA), reflecting legislative concern about the financial stability of the PBGC.]
PBGC guarantees payment of basic pension benefits earned by more than 44 million American workers participating in more than 27,000 private-sector defined benefit pension plans. PBGC operates two separate programs. The single-employer program protects nearly 34 million workers, retirees, and beneficiaries in about 26,000 pension plans. The smaller multiemployer program – which covers collectively bargained plans that are maintained by two or more unrelated employers – protects more than 10 million workers, retirees, and beneficiaries in about 1,500 multiemployer plans.
March 30, 2009
Just months before the start of last year's stock market collapse, the federal agency that insures the retirement funds of 44 million Americans departed from its conservative investment strategy and decided to put much of its $64 billion insurance fund into stocks.
Switching from a heavy reliance on bonds, the Pension Benefit Guaranty Corporation decided to pour billions of dollars into speculative investments such as stocks in emerging foreign markets, real estate, and private equity funds...
Nonetheless, analysts expressed concern that large portions of the trust fund might have been lost at a time when many private pension plans are suffering major losses. The guarantee fund would be the only way to cover the plans if their companies go into bankruptcy.
"The truth is, this could be huge," said Zvi Bodie, a Boston University finance professor who in 2002 advised the agency to rely almost entirely on bonds. "This has the potential to be another several hundred billion dollars. If the auto companies go under, they have huge unfunded liabilities" in pension plans that would be passed on to the agency...
We have an out-of-control corporate oligarchy for our government. If we would stop spending 50¢ for every dollar spend in the world on defense, we would have money for some of our other priorities.
May 14, 2009
At the heart of the inspector general's inquiry is a controversial decision made in early 2008 to gradually shift billions of dollars from bonds, which make up the bulk of the agency's assets, into stocks, real estate, and private equity investments. The goal, supporters say, was to improve returns and therefore the odds that the agency's gap between its assets and its potential obligations—about $11 billion, currently—would close, avoiding the need for a government bailout at some point down the road. Critics called the move hasty and ill-informed and said it would subject the agency's assets to too much additional investment risk.
Although the shift was approved in February 2008, a PBGC spokesman said no assets have been moved yet under the "strategic partnership" contracts to farm out asset management.
"We will work with our board to decide whether these contracts should be terminated and whether strategic partnerships fit into the board's investment approach going forward," said Vince Snowbarger, the PBGC's acting director, in a written statement. Future PBGC directors won't be allowed to be directly involved in procurement, he added.
In addition to the contract Goldman Sachs was awarded to manage up to $700 billion, Blackrock and JPMorgan each received contracts to manage up to $900 million in real estate and private equity assets, the report said.
Goldman's supporting role in the inspector general's report once again highlights that company's often cozy connections with the halls of government power. Those ties have earned the firm the nickname "Government Sachs," from the fact that Henry Paulson, President George W. Bush's last Treasury secretary, once ran Goldman, to the close ties between Goldman and AIG (AIG), and the bank's receipt of $12.9 billion of AIG's bailout money. Meanwhile, President Barack Obama received nearly $1 million in campaign contributions from Goldman employees, second only to University of California workers.
The PBGC report documents 29 emails between Millard's PBGC account and a Goldman pal, including the extensive assistance by the banker in Millard's job search. That assistance ranged from making introductions to passing along Millard's résumé, biography, and press clippings to CEOs at other financial firms.
Millard called the allegation of impropriety "ridiculous" and said he had a "deep personal relationship" with the Goldman executive. In a written response from Millard that is attached to the report, the former director insists:
"I always acted in the interests of the agency."
In a letter Millard sent Batts, dated Apr. 28, Millard defends his position on the PBGC panels as an attempt to get things done at an agency that in the past hadn't always moved quickly. And some of his defenders imply there may be a political motivation to Batt's report since Millard is an active Republican. Batts notes that her inquiry began long before the November 2008 election and says she has seen no evidence of partisanship.
The investigation, begun on Sept. 17, 2008, as a simple review of the PBGC's implementation of its new investment policy. But within a few weeks it had broadened into a look at Millard's behavior after Batts was approached by an unnamed whistleblower with specific allegations. By Oct. 31, when the PBGC was to issue the contracts with Goldman, JPMorgan, and Blackrock, Batts suggested holding off, but Millard wouldn't, Batts said in a telephone interview.
Unprecedented Dual Role for PBGC Chief
According to the inspector general's report, a whistleblower accused Millard of contacting executives at firms bidding for PBGC business "in order to enhance his future employment prospects." The inspector general's subsequent investigation found 29 emails documenting the extensive efforts the unnamed Goldman executive made on Millard's behalf. The draft report notes that some PBGC employees involved in the investment portfolio "believed that the former Director made some decisions based on his relationship with certain industry members and not on the merits themselves."
Because Millard didn't record details of his calls, visits, and emails, "we could not determine whether [his] communications with Wall Street firms had any impact on his decisions," the report says. However, Millard's actions "made PBGC vulnerable to allegations of bias, improper influence, or abuse of position."
Many of the questions around Millard's conduct stem from his "unprecedented" role on the committee that evaluated bidders and awarded contracts; ordinarily, PBGC directors haven't served in that capacity. Batts says she told Millard that serving on the committee was "unwise," but he continued when told there was nothing expressly illegal about it.
Members of the committee aren't supposed to contact bidders during a "blackout" period, when they are being evaluated—something Millard was told several times, the report says. Yet Millard made phone calls to 8 of the 16 firms bidding on the contracts, including all four finalists and the three firms that were ultimately chosen, Batts wrote in the report. At least nine calls were made from or received at Millard's phone to Goldman Sachs during the three-month blackout period, most to an executive directly involved in the bidding process, Batts wrote. Another six calls were made to or from a key Blackrock official, and at least 10 calls to or from a managing director at JPMorgan.
The report says Millard's explanations for the contacts changed over time, and it suggests that several of those explanations didn't hold up. Batts called the contacts a violation of PBGC policy and federal acquisition regulations.
Millard's "improper actions raise serious questions about the integrity of the process by which the winners…were selected," Batts wrote.Pension Benefit Guaranty Corporation, the agency that guarantees pensions, on a list of "high risk" government operations in 2003
New York Times
July 28, 2003
Top government officials have begun a calibrated campaign to bring attention to corporate pension plans, which they say may be on a road to collapse. But underneath their measured words are proposals that could fundamentally change the $1.6 trillion industry, altering the way pension money is set aside and invested.
On Wednesday, the comptroller general placed the Pension Benefit Guaranty Corporation, the agency that guarantees pensions, on a list of "high risk" government operations. Elaine L. Chao, the secretary of labor, issued a statement on the same day warning that the decades-old system in which workers earn government-guaranteed pensions "is, unfortunately, at risk."
Treasury Secretary John W. Snow, a former railroad chief executive who had responsibility for a $1.3 billion pension fund, warned recently that a financial meltdown similar to the savings-and-loan collapse of 1989 might be brewing.
Steven Kandarian, the executive director of the Pension Benefit Guaranty Corporation, gave a speech earlier this month in which he foresaw a possible "general revenue transfer" — polite words for a bailout of the agency. Before being named to head the agency, Mr. Kandarian was a founding partner and managing director of the private equities firm of Orion Partners.
While officials want to underscore the dangers to retirement benefits that millions of Americans count on, they do not want to frighten consumers, roil financial markets or anger the companies that already put billions of dollars into the system.
But some pension analysts, reading between the lines, say they think that officials are not only looking at calling upon companies to put more money into their ailing pension plans — a painful prospect at a time when cash is tight — but also at the more radical remedy of encouraging funds to reduce their heavy reliance on the stock market.
At issue are defined-benefit pensions, the type in which employers set aside money years in advance to pay workers a predetermined monthly stipend from retirement until death. Today, about 44 million private-sector workers and retirees are covered by such plans. Three years of negative market forces have wiped away billions of dollars from the funds, triggering the defaults of some pension plans and leaving the rest an estimated $350 billion short of what they need to fulfill their promises.
Until recently, the idea that America's pension edifice was built on a flawed foundation was preached by a tiny number of financial specialists and considered heresy by almost everyone else. But after several years of declines in the stock market, there is a growing argument that pension managers, who have been investing most of their money in stocks for years, should be in predictable bond investments that would mature when the money will be needed, matching the retirement ages of their workers.
Now the view is gaining ground in academia, and getting a fair-minded hearing by well-placed financial officials, who are incorporating some of its reasoning in their pension proposals.
The measures they have put forward bear little resemblance to those considered earlier this month in a rancorous House Ways and Means Committee session. The House pension bill is more generous to business. If enacted, it would lop tens of billions of dollars off the amounts companies would pay into their pension funds in each of the next three years. Businesses favor the bill's approach, but hoped to make its changes permanent.Treasury officials say they think that this approach would put benefits at risk, particularly at companies with older workers who will be claiming their pensions soon.
"The fact of the matter is that more money is needed in those plans, to ensure that older workers receive the benefits they have earned through decades of hard work," said Peter R. Fisher, under secretary for domestic finance, in testimony to a House subcommittee panel earlier this month.
The high number of pension funds that have defaulted has already severely weakened the pension insurance agency, raising fears of a bailout. The agency finances its operations by charging companies premiums, and it still has enough cash flow to make all of its payments to retirees for now.
But its deficit has grown to record size, and it cannot keep absorbing insolvent pension plans indefinitely. It could raise premiums, an unpopular idea with companies, or in dire straights it could turn to the taxpayers for more money. Permitting companies to pay less into their pension plans would only increase the risk of such a bailout. Thus, the Treasury's calls for what Mr. Fisher called a "comprehensive reform."
Unknown to most Americans, a small group of finance specialists has been making the case for a number of years that pension funds are in danger because their managers invest heavily in stocks. These analysts were hooted at during the stock boom years of the 1990's, but in the aftermath of a three-year bear market, their arguments are being considered more carefully.
Money managers of all sorts invest in stocks, of course, and no one is questioning stocks for mutual funds, foundations or university endowments. But pension funds are different, the argument goes, and they require a different strategy: stocks when workers are young, perhaps, but later on, as workers age, an ultraconservative portfolio of bonds, with durations shortening as they approach retirement.
This type of pension investment strategy went out of style in the 1960's and is little used today. (Life insurers make a notable exception, using what they call duration-matched bonds when they issue annuities.) Stocks are widely assumed to return more over time than bonds held to maturity, and have therefore seemed a cheaper investment vehicle.
And the implications of a revival of the old strategies would be profound. Pension funds, with assets worth roughly $1.6 trillion at the end of 2002, make up a significant share of the stock market and help to drive its movements. Suggestions that pensions might be safer if this money were placed elsewhere are not warmly received on Wall Street.
If anything, corporate pension managers appear to be moving toward more risk, not less. The composition of pension portfolios is not generally disclosed, so trends are hard to track. But anecdotal evidence suggests that pension managers are turning to hedge funds, real estate investment trusts, emerging markets and other riskier investments, in an effort to recoup the stock losses of the past three years.
Companies appear to be "making the smallest contributions allowed, while taking investment risk in the hope that their gamble will pay off," said Jeremy Gold, an outspoken advocate of duration-matched bonds for pensions funds.
The notion that low-risk bonds might be the solution to the pension problems, which sounds so radical to companies, is not being uttered by cabinet members. Ms. Chao and Mr. Snow have drawn attention to the pension problems, but have not put forward specific remedies. When he mentioned the savings and loan crisis, in a meeting with reporters and editors of The Wall Street Journal, Mr. Snow cautioned that he did not want to overstate its similarities to today's pension difficulties.
Mr. Snow did go on to say, though, that the same ailment that felled the savings and loan institutions in 1989 is now eating away at pension funds: a mismatching of assets and liabilities. And he noted that, like the savings and loan institutions, pensions are covered by a federal insurance agency. The presence of a federal insurer in such cases is sometimes said to promote riskier behavior.
The job of developing and putting forward a specific response to the pension danger has been left to officials below cabinet rank, close to the pension insurance agency. The Treasury's Mr. Fisher outlined the administration's ideas in some detail in his Congressional testimony. He recommended, foremost, a new way of calculating pension obligations, which would take employee demographics into account. This method would recognize that pension payments owed to workers retiring soonest need to be funded more securely than those for much younger workers.
Mr. Fisher also called for less reliance on "smoothing," the practice of averaging factors over several years when pension values are calculated.
Pension calculations involve the use of interest rates, but since real-world interest rates zig-zag up and down, they are smoothed in an effort to keep the pension numbers stable. Currently, the smoothed rate used by actuaries is an average of historic rates from the past four years.
Mr. Fisher testified that four years was too long, and that this excessive smoothing was causing the very volatility it was intended to reduce. This happens, he said, because the smoothing blurs the true state of a pension fund, masking deterioration for months at a stretch, until companies find their plans are noncompliant and have to start pouring in money.
Reducing the excess smoothing would help companies avoid such unpleasant surprises, Mr. Fisher said. He recommended moving gradually from the four-year average to a 90-day average.
Pension specialists who have considered these remarks carefully say they think that what Mr. Fisher is really describing is a way to shift pensions into conservative bond investments. Mr. Fisher said nothing of this in his testimony, but actuaries said the message was implicit: If smoothing is phased out, pension values would start zig-zagging with interest rates, unless managers moved into bonds.
Mr. Fisher declined to elaborate on his testimony.
Separately, Mr. Gold has testified that the administration proposals would help to relieve the pressure on pensions. But he urged the administration to go further "to encourage prudent behavior by plan managers."
Ron Gebhardtsbauer, senior pension fellow for the American Academy of Actuaries, said the problem is that such prudent behavior would cost companies more.
"Employers kind of like having stocks in there," Mr. Gebhardtsbauer said. "It makes the pension plan cheaper."Pension Benefit Guaranty Corporation (PBGC), the federal agency that insures company pensions, pays benefits to 44 million Americans whose pension plans were terminated by their employers. A host of companies have terminated their pension plans since the mid-1980s and turned them over to the PBGC. Benefits paid to retirees from terminated plans often fall well short of those promised when the companies established the pensions. Annual PBGC benefits are capped at $44,386, even if payments were larger before a company terminated the plan [subject to other statutory limitations, as of 2011, the PBGC insurance program pays pension benefits up to $54,000 per year to participants who retire at age 65]. The Center for Federal Financial Institutions, a think-tank in Washington, D.C. warned in September 2004 that the PBGC could run out of money by 2020. Many companies have terminated pension plans (defined-benefit plans) and substituted profit-sharing plans or (401(k)) pension plans (defined-contribution plans). [More Tension Over Pensions, Pittsburgh Tribune-Review, October 3, 2004]
October 3, 2004
The federal agency that insures company pensions has developed an $11 billion tear in its safety net.
The Pension Benefit Guaranty Corp. is buckling under a load of steel company and airline pension plans that were dropped on it in recent years. Those plans account for more than 70 percent of benefits the pension insurance agency now pays. And it estimates that teetering airline pension plans, such as those at bankrupt US Airways and United Airlines, are under-funded by $18 billion.
What's more, benefits paid to retirees from terminated plans often fall well short of those promised when the companies established the pensions.
Promised to folks like veteran US Airways pilot Harry Krenitsky, 57, of Youngstown, Ohio. In order to supplement his truncated pension, he is fixing up an apartment complex to rent out near his home.
The airline terminated the defined-benefit plan for its pilots in March 2003 and dumped it on the pension agency. The action saved US Airways $600 million over seven years -- and capped pilots annual benefits at $44,386 a year.
"I would have gotten an annuity of about $100,000 a year," said Krenitsky, who earns more than $170,000 a year flying jumbo jets across the Atlantic Ocean.The local responsibility
"What I'm going to get is somewhere around $35,000 to $40,000," said the 28-year pilot, who is due to retire within three years. "That's a helluva cut."
Nearly 40,000 people in the Pittsburgh region receive or will receive pension payments from plans turned over to the Pension Benefit Guaranty Corp., according to data it provided to this newspaper. That is, the insurer supports 22,851 current retirees and 16,690 workers in the six-county area.
"If something were to happen to the PBGC, it would be devastating to Western Pennsylvania," said Jim Centner, director of the Steelworkers Organization of Active Retirees, an offshoot of the United Steelworkers of America, Downtown.The pension insurer began the year with a deficit of $11.2 billion. Put simply, that's the difference between benefits owed (liabilities) and cash (assets) the agency holds to pay them. That's a wild swing from just three years ago, when the pension organization recorded a $7 billion-plus surplus.
In the interim, a wave of bankruptcies ranging from Enron to US Airways first filing piled an unprecedented number of underfunded plans on the agency.
"There's no threat of not being able to handle (PBGC's) near-term obligations," U.S. Commerce Secretary and pension agency board member Donald Evans told the Pittsburgh Tribune-Review recently. "It doesn't mean lower benefits."The longer term is less clear. Evans wants the companies that sponsor pension plans to do more to shore up the pension system, but won't back a federal bailout of the agency.
"One thing we can't do is shift the burden from company shareholders to taxpayers," Evans said.How the funding works
As devised by Congress, the Pension Benefit Guaranty Corp. is not funded by tax receipts but by premiums paid by company pension plans. Each plan covered by the insurer annually pays $19 per worker. The insurer also earns money from investing the funds from plans it inherits.
People retiring at age 65 whose pensions were terminated this year receive up to $3,699 a month, or $44,386 a year. The amount, adjusted annually, is lower for those retiring before 65, such as pilots who must retire at 60.
Retirees who receive -- or workers due to receive -- more than $44,386, or $3,699 a month, get no more than that when a company dumps a plan on the pension insurer.
Sam Sherlock, 63, of Munhall, worked for the LTV Corp.'s coke plant in Hazelwood for 35 years. He then transferred to LTV's tin plant in Aliquippa for three more years before retiring in 2001. LTV went bankrupt and liquidated soon afterward.
"I started getting a pension check from the PBGC, otherwise we'd be talking about no pension at all," said Sherlock, of the plan LTV had terminated.Busted benefactor
"If LTV had stayed healthy, I would have wound up with about $2,500 a month," he said. "But the cut I took from the PBGC was $1,313 of that."
If the pension insurer were held to strict accounting principles, it would be deemed insolvent "and would be shut down if it were a private insurer," said the Center for Federal Financial Institutions, a think-tank in Washington, D.C.
The center warned in mid-September that the Pension Benefit Guaranty Corp. could run out of money by 2020. It also said that depending on a host of variables, including a rise in terminated plans, the pension insurer might need an infusion of between $14 billion and $67 billion.
"The truth of it is nobody knows for sure," said Gail Webb, manager of the Ohio Pension Rights Project, Cincinnati, which helps pensioners collect their benefits.Created in 1974, the Pension Benefit Guaranty Corp. pays the benefits of some 44 million Americans. These retirees participate in more than 31,000 defined-benefit pension plans, which companies turned over to the pension insurer.
"But if we have more big companies go bankrupt, is Congress going to work on a bailout or put more money in the pot?" Webb asked.
Centner recalls a host of area companies that have terminated their pension plans since the mid-1980s and turned them over to the pension insurer.
Wheeling-Pittsburgh Steel, for instance, terminated pensions covering more than 22,000 people in 1985, Centner said. Other area plans terminated in the metals industry now footed by the pension organization include such companies as Edgewater Steel, Oakmont; Copperweld Corp., Pittsburgh; and Heppenstall Co., Lawrenceville.
Pat Carnevale, 67, of Brentwood, spent 40 years at LTV Corp.'s Hazelwood coke plant before retiring in 2000, after the plant closed. He started retirement with a full pension, until it was terminated in April 2000.
"I lost about $700 a month, going from about $2,400 to $1,700," said Carnevale, of his benefits.Terminated plans in this region are hardly confined to steelmakers, records show. The pension corporation also administers defined-benefit plans of such diverse companies as Menzie Dairy, McKeesport; Sterling Packaging Corp., Jeannette; and Jones Brewing Co., Smithton.
"Now if I drop dead tomorrow, my wife would get about $200. Whereas, she would have gotten $800, if the PBGC hadn't taken over the plan" after LTV terminated it, Carnevale said.
Defined-benefit plans oblige companies to fund however much is necessary to bring pension fund balances and benefit payments to a specified level. When investment returns on those funds do poorly, companies must shore up the pension plans with more money.
Many companies -- including US Airways -- have terminated those plans and substituted profit-sharing plans or defined-contribution (401(k)) pension plans. They set company contributions to the pension plan at a fixed amount, despite swings on fund returns. And they don't guarantee a floor on the benefits paid.
The Pension Benefit Guaranty Corp.'s deficit could widen even further in the coming months. Cash-strapped US Airways could yet terminate the defined benefit plans for nearly 25,000 aircraft mechanics and flight attendants, which are running a $2.3 billion deficit, the pension insurer estimates. And United Airlines, also in bankruptcy, could turn over pensions running a $6.4 billion deficit.
US Airways skipped a $110.5 million contribution to employee pension plans that was due Sept. 15. Bankruptcy law allows the airline to skip the pension contribution because it was part of US Airways' debt incurred prior to bankruptcy. The carrier also will skip $14.5 million contributions due Oct. 15 and Jan. 15, say court documents.
"We need to make clear that pension contributions are required, whether a company is in bankruptcy or not," said Pension Benefit Guaranty Corp. Executive Director Bradley Belt in a recent statement.Leaving Las Vegas
Pilot Krenitsky even lives next door to a fellow bankrupt-company pensioner.
"He's a retiree of J&L Steel whose pension was dumped on the PBGC. So, they're paying his pension too," said the pilot.Pension terminators
"It used to be I could go to Vegas on vacation, and if I lose a bunch of money, I could make it up," said LTV coke-plant pensioner Carnevale. "I haven't been to Vegas in three years."
Companies based or with a strong presence in Western Pennsylvania whose pension plans were taken over by the Pension Benefit Guaranty Corp.:
# Anchor Glass Container Corp.
# Allegheny Health Education & Research Foundation
# Bethlehem Steel Corp.
# Blaw Knox Corp.
# Bollinger Corp.
# Carbide/Graphite Group
# Copperweld Corp.
# Country Belle Cooperative Farmers
# Durasteel Abrasive Co.
# Harmony Dairy
# Herman Corp.
# Heppenstall Co.
# Industrial Ceramics Inc.
# J & L Steel Corp.
# Jeannette Corp.
# Jones Brewing Co.
# Latrobe Die Casting
# LTV Steel Corp.
# Menzie Dairy Co.
# Mesta Machine Co.
# McKeesport Steel Castings Co.
# Monongahela Connecting Railroad
# Monsour Medical Center
# NIGPP Pittsburgh Nipple Works
# National Steel Corp.
# Oakmont Steel Inc.
# Pennsylvania Engineering Co.
# Phar-Mor Inc.
# Sharon Steel Corp.
# Schneider's Dairy
# Sterling Lebanon Packaging
# Swank Refractories Co.
# Triangle News Co.
# Tri-State Engineering Co.
# US Airways Group
# Vulcan Engineering Co.
# Wean Inc.
# Weirton Steel Corp.
# Wheeling-Pittsburgh Steel Corp.
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