U.S. Says LTV Must Finance Pension Plans
The government Tuesday ordered steel and defense giant LTV Corp. to resume financing of three pension plans covering 100,000 workers and retirees and accused the company of dumping the plans to enhance profits.
“The federal government will not tolerate any interruption in benefit payments to retirees,” said a stern Kathleen Utgoff, executive director of the federal Pension Benefit Guaranty Corp. The independent federal agency has said the LTV case threatened the agency’s solvency.
The agency is charged with guaranteeing basic retirement benefits in private pension plans. It administers two insurance programs financed by premium payments from employers, covering a total of almost 40 million participants in 112,000 pension plans.
The agency’s action “should send a message to other steel companies,” Utgoff told reporters at a crowded news conference. “The PBGC has also restored these pension plans in order to curb abuse of the pension insurance program.”
The agency notified the nation’s No. 2 steelmaker that it was restoring three pension plans that were terminated Jan. 13, 1987, after LTV filed for protection under federal bankruptcy laws in July, 1986.
Utgoff said another reason for the action was an agreement by LTV Steel Co. Inc. in contract negotiations with the United Steelworkers of America to establish new pension plans and to contribute to a profit-sharing and employee stock ownership program “that, together, could cost as much as $160 million.”
The pension agency earlier challenged the contract between the union and LTV in Bankruptcy Court but lost. The agency is appealing that decision, asserting that the deal violates federal pension law “by using pension insurance to subsidize ongoing pension plans.”
LTV said it will move immediately in federal court to block the agency’s action to reinstate the three pension plans of the company’s steel subsidiary.
