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Pension Funds

Westinghouse DB plan short $937 million if terminated, PBGC says

Westinghouse Electric Co. LLC, Pittsburgh, could wind up having to put $937.4 million into its defined benefit plan if the bidder for the bankrupt company declines to assume the plan, according to calculations by the Pension Benefit Guaranty Corp.

Westinghouse filed for Chapter 11 bankruptcy on March 29 in New York. On Aug. 29, PBGC filed a claim for the amount it calculated would be due if the pension plan were terminated and transferred to the PBGC.

Westinghouse spokeswoman Sarah Cassella said that the PBGC claim "assumes that Westinghouse will terminate the plan in bankruptcy; we have not taken any action to do so. Our business plan calls for continued contributions to the fund."

The company's latest Form 5500 filing showed that as of Dec. 31, 2015, the pension fund was overfunded at 104.4%. It had $966.4 million in assets, covering 9,714 participants.

Ongoing pension plan liabilities are measured by using corporate bonds rates within 10% of a 25-year average, which in 2017 is 200 to 300 basis points higher than market rates, while PBGC officials must use market rates that reflect what it would cost to buy an annuity through an insurance company.

The PBGC makes those calculations in bankruptcy cases to protect its own assets when there is a possibility that the agency will have to assume a corporate plan, and to protect participants' benefit levels. PBGC officials declined to comment.

Ms. Cassella of Westinghouse said the company is developing its exit strategy. "Right now, we are exploring the market in connection with a potential sale or investment process. For various reasons, we cannot disclose details at this time, but we are confident the process will be successful," she said.