Pension Benefit Guaranty Corp. will assume benefit payments for two pension plans for salaried employees at Hawker Beechcraft Inc., Wichita, Kan., according to a news release from the PBGC.
The U.S. Bankruptcy Court for the Southern District of New York approved the settlement on Jan. 31, which includes a $2.5 million payment by Hawker Beechcraft to those salaried retirees whose benefits exceed those paid by the PBGC under rules set by Congress.
A third pension plan for International Association of Machinists and Aerospace Workers union employees will be frozen and remain with the company.
Union workers will be moved into a new defined contribution plan. Salaried employees hired after Jan. 1, 2007, are already in a defined contribution plan.
One of the terminated plans has $358.3 million in assets and $727.5 million in liabilities, according to preliminary PBGC estimates. The PBGC says it will be responsible for about $343.7 million of the $369.2 million shortfall. The other plan has $47.4 million in assets and $97.7 million in liabilities. The PBGC says it will be liable for about $47 million of the $50.3 million shortfall.
A union spokesman said in August the machinist union plan had about $500 million in assets with an unfunded liability of $158 million.
Business Insurance, a sister publication of Pensions & Investments, contributed to this story.