Union Tries to 'Shut Down' PBGC Termination Request

June 27, 2002 (PLANSPONSOR.com) - Concerned that union members will be shortchanged by government assumptions, the United Steelworkers of America have filed a motion opposing the termination of two pension plans.

The motion, filed in the US District Court for the Northern District of Ohio, seeks to oppose the termination of two pension plans that cover union members at Republic Technologies International (RTI).  The Pension Benefit Guaranty Corporation (PBGC) picked up the plan earlier this month (see PBGC Picks Up Another Steel Casualty ).

The USWA claims that the PBGC’s requested termination of four defined pension plans one month prior to the anticipated closure of all RTI facilities would result in the denial of “shutdown” benefits to employees with 15, 20, or more years of service to the company.  Furthermore, the USWA claims that the PBGC has allowed shutdown benefits at LTV and CSC – and says there “is no reason for them to treat RTI workers differently.”

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The Steelworkers are challenging the preemptive termination date because the Union believes that PBGC is seeking to avoid paying out claims that have already been earned by its members and funded with premiums paid by the company, according to the USWA. 

The USWA says that negotiated agreements made by RTI and the USWA were specifically designed to account for the risks and uncertainties associated with steel industry employment -noting that the plans for USWA-represented employees at RTI promise a “shutdown” benefit.

The shutdown benefit enables a worker meeting certain age and service requirements to begin receiving pension benefits after the shutdown, rather than having to wait to reach a specified retirement age.

Interest Rates Stay Put

June 26, 2002 (PLANSPONSOR.com) - Members of the Federal Open Market Committee (FOMC) voted unanimously to keep the federal funds rate unchanged at 1.75%, despite increases in economic activity.

Commenting on the decision to keep rates at a four-decade low, the FOMC pointed to the leveling of the upswing in inventory investment. In addition, growth in final demand appears to have moderated.

The FOMC said in a press release that it expects “the rate of increase of final demand to pick up over coming quarters, supported in part by robust underlying growth in productivity, but the degree of the strengthening remains uncertain.”
 
The statement said risks were equally balanced between economic weakness and a flare-up in inflation, a stance unchanged from the last meeting on May 7, but economists said its overall downbeat tone indicated no rate increases were likely in the imminent future.

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US interest rates have remained at this level since December 2001.

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