A federal agency announced Friday that it has taken responsibility for three pension plans covering nearly 4,000 workers and retirees of Aloha Airlines, which recently emerged from bankruptcy protection.
The Pension Benefit Guaranty Corp., which insures private defined-benefit pension plans, estimated that together the three plans are 55 percent funded, with $190 million in assets to cover $345 million in benefit promises. The agency said it will be liable for $117 million of the $155 million shortfall.
The three pension programs covered are: the pilots' fixed retirement plan; the pension plan for non-represented employees; and the plan for employees represented by the International Association of Machinists, the PBGC said.
A fourth plan, for dispatchers, will remain under the Honolulu-based airline's responsibility, the PBGC said.
The carrier filed for bankruptcy protection in December 2004 and had sought court approval to terminate its pension plans. A court-approved settlement in February between Aloha and the PBGC allowed the three plans to be terminated and thus taken over by the agency.
"Assumption of the plans will have no material effect on the PBGC's balance sheet" because an estimate of the liability was included in PBGC's 2005 financial statements, the agency said.
The PBGC has reported a deficit of $22.8 billion. Bankrupt steel and airline companies that have transferred pension responsibilities to the PBGC have been a major factor in the agency's swollen debt.
PBGC's operations are financed by insurance premiums paid by companies that sponsor traditional pension plans. It also earns money from investments and receives funds from pension plans it takes over. The agency is not funded through tax revenues.
In Congress, both the House and Senate have passed legislation to deal with the nation's troubled pension system, but differences still need to be ironed out.
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