LTV STEEL Bankruptcy's effect on pensions remains uncertain
The most the government agency will guarantee a retiree is $3,392 a month.
By CYNTHIA VINARSKY
VINDICATOR BUSINESS WRITER
YOUNGSTOWN -- LTV Steel retirees can be assured they'll get their pensions, a federal pension guaranty board spokesman promised, even if the steelmaker manages to divest itself of its pension obligations.
However, the amount of the pensions might be reduced.
Cleveland-based LTV, one of the nation's largest steelmakers, is asking the U.S. Bankruptcy Court in Youngstown to approve its plan to shut down all its basic steelmaking operations and to throw out its bargaining agreement with the United Steelworkers of America.
A hearing on the motion, which also calls for idling the LTV Steel Coke plant in Warren, is set for Dec. 4.
Besides the effect LTV's plan would have on workers and their communities, the action would eventually eliminate health benefits for thousands of LTV retirees and would have an uncertain effect on their pensions.
The steel giant has 85,000 active employees and retirees in its pension plan, with between 6,000 and 7,000 retirees living in the Mahoning and Shenango valleys.
Retirement checks: But a public affairs specialist for the Pension Benefit Guaranty Corp. in Washington said pensioners will continue receiving their retirement checks without a break, even if bankruptcy Judge William Bodoh gives LTV the right to terminate its agreement with the union.
In that case, he said, the PBGC would take over trusteeship of the pension plan's assets and liabilities and "basic" benefits would continue.
The PBGC, a federal agency funded by contributions from its pension plan participants, works like an insurance policy by kicking in whenever a pension plan is terminated.
Amount not guaranteed: Payments might be lower than what retirees are used to, however. The PBGC spokesman said the corporation would pay basic benefits up to a maximum of $3,392 per month, but some items, such as severance benefits and shutdown benefits, are not guaranteed.
Benefit improvements that happened within the last five years would be phased in gradually, he added, and might be paid only in part. "It would be a mistake to assume that the payments would stay the same," he said.
The PBGC spokesman said LTV's pension plan will be "an administrative challenge" for the agency staff because of its size.
"We estimate LTV's plan to be short about $2 billion, but we would have the assets to make up for that," he said. "We try to respond as quickly as possible. There will be no interruption in the benefits."
Meanwhile, LTV is asking the court to allow it to use funds it paid into a Voluntary Employee Beneficiary Association to pay for hourly retirees' health insurance expenses.
The VEBA fund contains about $92.8 million, according to court documents, but that won't last long, according to Bill Prejsner, coke plant unit president of USWA Local 1375. He said the fund will likely run out in about 18 months, and the resulting loss of health benefits is a major concern for the company's retirees.
WCI statement: In a related matter, Tim Roberts, a spokesman for WCI Steel located adjacent to the coke plant on Warren's southwest side, wouldn't comment on whether the steelmaker would consider buying the LTV facility. The plant produces coke, which is used in steelmaking.
Prejsner, who represents the 180 USWA workers at the coke plant, said WCI makes about $1 million a month selling steam to the coke plant, and it also saves money by buying coke oven gas to fuel its furnaces instead of using higher-cost natural gas.
Roberts acknowledged that the closing of the coke plant would be "a blow, but not a major blow" to the steelmaker.
Prejsner said LTV is reducing production gradually at the coke plant, but hasn't laid off workers since announcing its shutdown plans a week ago. He said USWA officials are working to find an alternative to the proposed closing of the coke plant.