Kaiser's pension plan in government hands

By NICHOLAS K. GERANIOS
The Associated Press

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The Pension Benefit Guaranty Corp. said most of the people covered by the plan are retired Steelworkers who were employed at now-shuttered Kaiser Aluminum plants. It is the second Kaiser pension plan the agency has taken on, according to an agency news release.

"The PBGC is assuming this plan because Kaiser Aluminum meets the legal criteria to transfer these unfunded liabilities to the federal pension insurance program," said Executive Director Brad Belt.

"Retirees will continue to receive their monthly benefit checks without interruption, and nearly all plan participants will receive the same benefit from PBGC that they were promised by the company," he said.

Kaiser has operations in 10 states and overseas. Many of the company's operations in Washington state were closed in recent years because of the high cost of electricity and low prices for aluminum. Kaiser filed for bankruptcy protection under Chapter 11 of the federal code in early 2002. Company executives have said high pension costs are one barrier to emerging from bankruptcy. In February, U.S. Bankruptcy Court ruled that Houston-based Kaiser met the legal requirements to have the federal agency take over some of its pension plans. "The company and the PBGC continue to be in discussions concerning the status of the other plans," Kaiser said in the release.

The plan at issue yesterday has about $49 million in assets and $96 million in liabilities. The federal agency said it expects to be liable for virtually the entire $47 million shortfall.

That is on top of the $246 million claim the agency incurred in December 2003, when it assumed responsibility for Kaiser Aluminum's pension plan for 5,000 salaried employees.

Kaiser Aluminum and its subsidiaries also sponsor six other pension plans, which remain ongoing. Kaiser has about 25,000 retirees around the country.

Under federal pension law, the maximum guaranteed pension at age 65 for participants in plans that terminate in 2004 is $44,386 per year. The maximum guaranteed amount is lower for those who retire earlier or take survivor benefits.

The PBGC's initial estimate, which may change slightly upon review of plan documents, is that fewer than 1 percent of participants in the Kaiser Aluminum Inactive Pension Plan will be affected by these limitations.

The PBGC was created in 1974. It guarantees payment of basic pension benefits earned by 44 million American workers and retirees participating in more than 31,000 private-sector defined benefit pension plans. The agency receives no funds from general tax revenues. Its operations are financed largely by insurance premiums paid by companies that sponsor pension plans and by investment returns.

Copyright © 2004 The Seattle Times Company

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