PBGC receives notice that TWA pension plans may end

The Pension Benefit Guaranty Corp. (PBGC) was recently notified that Pichin Corp., a Carl Icahn entity and financial sponsor of two pension plans for Trans World Airlines Inc. (TWA), intends to request termination of the plans. The plans cover about 36,500 TWA employees and are underfunded by some $700 million.

TWA administers two plans. The Pilots' Pension Plan with about 4,000 participants is underfunded by about $200 million and the Employees' Pension Plan, with approximately 32,500 participants is underfunded by more that $500 million. Of the 36,500 participants, about 15,000 are currently employed by TWA.

Under the terms of a Jan. 5, 1993 agreement, Pichin has been responsible for financing the pension plans. Under the agreement, Icahn acquired the right to unilaterally terminate the plans at any time after Jan. 1, 1995.

If the plans are terminated in 2001 and become the responsibility of PBGC, federal law provides that the majority of participants' benefits would be fully covered by PBGC's maximum guarantee, which is $3,392 per month or $40,705 per year for a person age 65 with no survivor benefits.

The amounts are adjusted for retirees at other ages or those who elect survivor benefits. Also, in terminated plans, higher salaried employees and some early retirees may experience benefit reductions because federal pension law limits the type and amount of benefits that PBGC guarantees.

"Should Pichin Corporation decide to end the plans, I can assure the already-retired TWA employees that their benefit checks will continue without interruption and that workers and retirees will receive their pensions up to maximum amounts allowed by law," said PBGC executive director David Strauss.

PBGC has set up a TWA information link on the agency's Web site, http://www.pbgc.gov and a special TWA telephone hotline, 1-800-707-PBGC (7242).

Edited by Steve Tarnoff
Managing Editor, HRHub.com
Starnoff@vertical.net