PBGC will take over RG Steel pensions
WARREN, Dec 01, 2012 (Menafn - Vindicator - McClatchy-Tribune Information Services via COMTEX) --Bad news keeps coming for former employees of the RG Steel plant in Warren, with the announcement that pension payments may be reduced for workers after the bankruptcy.
The government-run Pension Benefit Guaranty Corp. will take over the pensions for the former RG Steel workers in Warren. The PBGC typically takes over pension plans for insured companies that declare bankruptcy, go out of business or otherwise liquidate assets.
For a company to stop paying its own pension and for the PBGC to take over, the company typically has to pay a pension termination fee, which for most companies is 1,250 per participant.
The PBGC's termination of the RG Steel hourly pension plan is yet another sad milepost in the failed bankruptcy case of a steelmaker that once employed more than 4,000 workers, according to a statement from the United Steelworkers union, which represents the former RG employees. The bankruptcy court in Delaware approved the pension plan termination in October.
"When the court was considering the motion, the USW filed the attached response in which it encouraged the PBGC to pursue claims against members of RG's controlled group and Renco relating to an early 2012 transaction in which Renco dumped 24.5 percent of its stock in RG Steel," according to the statement. "We pointed out that the PBGC had noted in an earlier filing with the Delaware court that such claims potentially exist against Renco and others relating to that transaction."
The change by Renco causes the company's equity stake in RG Steel to fall below 80 percent, which potentially would release Renco from pension obligations owed to the RG pension plan. The union believes the transfer was specifically made to evade pension liability, according to a filing in U.S. Bankruptcy Court in Delaware, where the RG Steel bankruptcy case is being heard.
The union further acknowledged in court documents that having the PBGC take over the pension plan would fiscally injure the affected workers. The union asked the PBGC to use all of its powers to maximize the assets of the pension plan.
If the PBGC could prove that stock dump was undertaken to avoid pension liabilities, it can return responsibility for the pension plan to Renco, and which would benefit RG retirees. PBGC controls that litigation, and nothing has been filed at this time. The USW is prepared to assist, according to the union statement.
The maximum pension benefit guaranteed by the Pension Benefit Guaranty Corp. is set by law and adjusted yearly. For plans that ended in 2010 and 2011, workers who retire at age 65 can receive up to 4,500 a month (54,000 a year). The guarantee is lower for those who retire early or when there is a benefit for a survivor. The guarantee is increased for those who retire after age 65.
RG Steel filed for bankruptcy May 31. At that point, the company began a process to finish existing orders. In June, more than 1,000 workers had been laid off at the Warren facility.
Since then, the site was bought by C.J. Betters Enterprises, a Monaca, Pa., company that bought the mill out of bankruptcy for 17 million.
Betters' ownership group winterized the plant in the event an operator can be found to restart operations.
Representatives from the PBGC were not available to comment.
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