The PBGC today announced a settlement with UAL Corp. to take over four pension plans collectively underfunded by $9.8 billion, of which the agency will be on the hook for $6.6 billion in guaranteed benefits. Under the settlement, which must still be approved by the U.S. Bankruptcy Court in Chicago, the PBGC will become the trustee for the four underfunded plans — the United Airlines Pilot Defined Benefit Plan, with $2.8 billion in assets and $5.7 billion in liabilities; the United Airlines Ground Employees Retirement Plan, with $1.3 billion in assets and $4 billion in liabilities; the United Airlines Flight Attendant Defined Benefit Pension Plan, with $1.4 billion in assets and $3.3 billion in liabilities; and the Management, Administrative and Public Contact Defined Benefit Pension Plan, with $1.5 billion in assets and $3.8 billion in liabilities.
"We believe that this agreement, under the circumstances, is in the best interests of the pension insurance program and its stakeholders," said PBGC Executive Director Bradley D. Belt in a press release.
He added that today's settlement underscores the need for a complete overhaul of pension funding rules and the pension insurance program. "Unless and until Congress fixes the rules that allow pension plans to become so underfunded, the insurance program and plan participants are at risk of suffering large financial losses," he said.
"The fact that the PBGC would sell their claim for a few pieces of silver calls into question their role as protector of employee defined benefit pension plans," Greg Davidowitch, president of United's Master Executive Council for The Association of Flight Attendants-CWA, said in a statement. "We are outraged by this avoidable action and will oppose it forcefully in the courts and on the streets. By law, termination of each plan must be considered separately, on its own merits," Mr. Davidowitch said.