The Pension Benefit Guaranty Corp., which insures the nation's corporate pension plans, has asked a federal court to appoint it the interim trustee of the pension funds of troubled Wheeling-Pittsburgh Steel Corp.
This unusual legal action -- the first ever by the agency -- was the first major move by PBGC's newly appointed executive director, Kathleen P. Utgoff. She cited the Wheeling-Pittsburgh's unsettled financial situation and its unfunded liabilities of $400 million in filing suit in U.S. District Court in Pittsburgh on Wednesday.
Utgoff said the action was intended to give the steel company time to reach an accord with its labor unions on reduced benefits or to terminate the plan. Normally, the government-chartered agency takes charge only if a pension plan is terminated. But the law does provide for pre-termination control under unusual circumstances.
A defined benefit plan is one in which the employer promises the retiree a certain amount of benefits.
Wheeling-Pittsburgh, which is trying to work out its problems under the protection of the bankruptcy code, was struck in July by workers after the company received permission from the bankruptcy court to abrogate its labor agreement with the United Steel Workers. The company has 8,200 workers in Pennsylvania, West Virginia and Ohio. U.S. District Court Judge Paul A. Simmon will decide next week on whether to appoint PBGC as the interim trustee.
The agency has also asked the court to have Wheeling-Pittsburgh turn over pension fund records so that it can act quickly if the plan does terminate. During the interim period, there will be no change in benefits paid to retirees.