U.S. Acts to Take Control of One LTV Pension Plan

The government moved Friday to take over one unfunded LTV Corp. pension plan and was told by the second-largest steelmaker to be prepared to take over another underfunded plan in January.

The federal Pension Benefit Guaranty Corp. filed a petition in U.S. District Court in New York to terminate and take over as trustee an LTV plan covering 8,800 salaried workers and pensioners who worked for Republic Steel before it was merged into LTV in 1984.

Meanwhile, LTV’s board of directors on Tuesday notified the PBGC that it intended to terminate another pension plan covering 13,000 salaried workers in January.

Together, those two actions would turn over to the government more than $500 million in LTV pension liabilities to salaried workers. LTV also estimates that it has unfunded pension liabilities totaling $1.9 billion to 84,000 working, laid-off or retired hourly workers. Last week, it asked the United Steelworkers to reopen contract negotiations on those retirement plans.

The company, citing its pension obligations as its biggest class of liabilities, filed in July for reorganization under Chapter 11 of the U.S. Bankruptcy Code.

At that time, LTV notified the 8,800 members of the Republic pension plan that the firm would no longer make monthly contributions to it. After meeting the August and September pension payrolls, there were no assets left, officials said.

The PBGC acts as a government insurer, guaranteeing earned retirement benefits for about 38 million workers covered by 112,000 defined-benefit pension plans.

Kathleen P. Utgoff, PBGC executive director, said the agency moved to take over the Republic salaried workers’ plan after LTV said it lacked the funds to cover $2 million in October pension benefits for 3,300 retirees and surviving spouses.