FRONTLINES: WASHINGTON: PBGC WANTS PENSION PLANS PROTECTED IN DOWNSIZINGS

The Pension Benefit Guaranty Corp., Washington, is planning to get tough on corporations that off-load large chunks of their businesses.The move is an attempt to protect pensions of workers in large operations sold or merged out of existence in corporate downsizings. The agency will propose a regulation in the fall, enforcing Section 4062(e) of the Employee Retirement Income Security Act of 1974, said Ellen "Nell" Hennessy, the PBGC's chief negotiator an d deputy chief executive.The proposal would let the PBGC stake a financial claim on a corporation's assets, in case the company sells or shutters a subsidiary or operation representing more than 20% of its work force eligible for p ensions and later decides to shut down the pension plan, Ms. Hennessy said.The agency could require a financial guarantee from the corporate parent jettisoning the business, ask it to make additional contributions to the pension pl an, or set up an escrow account to cover possible future lapses in pension fund contributions or the risk of a plan termination.Federal pension law changes in 1994 made it mandatory for companies to report plans for such transactio ns to the agency.Instead of waiting until a company is in bankruptcy, she said, the PBGC now will "act at the first hint of corporate transactions that might jeopardize pensions."