Reply #50: PBGC to bail out United pilots' plan (privatizing profit/socializing debt) [View All]

[UpInArms]

http://cbs.marketwatch.com/news/story.asp?guid=%7BD0CC069A%2D1B11%2D4F53%2D9E49%2D5E5DAAB3CA91%7D&siteid=mktw

SAN FRANCISCO (CBS.MW) -- The Pension Benefit Guaranty Corp. said Thursday that it will assume responsibility for the pension plan set up on behalf of United Airlines' pilots.

There are about $5.7 billion in benefit liabilities in the plan, with $2.9 billion of that amount underfunded.

The PBGC said it expects to be liable for $1.4 billion in guaranteed benefits, making this the third-largest clam in the 30-year history of the pension-insurance program. It's funded from insurance premiums collected from companies that sponsor pension plans.

"The PBGC will protect the pension benefits of United Airlines' pilots up to the limits set by law," said PBGC Executive Director Bradley Belt in a statement. "Retirees will continue to receive monthly benefit checks without interruption, and other pilots will receive benefits when they retire."

UAL Corp. (UALAQ: news, chart, profile), United's corporate parent, has been operating under Chapter 11 federal bankruptcy protection from creditors. It's on record as saying it would be best for the carrier's survival to terminate defined-benefit pensions before exiting Chapter 11. See story.

Belt said that PBGC reached the decision to back the pilots' pension plan after concluding that the beleaguered carrier could only afford to fund three of its four pension plans.

Under federal law, the maximum pension payout for participants age 65 in plans that end in 2004 is $44,386 a year.

...a bit more...