Benefits February 11, 2005

United Announces Non-Qual Pilot Pension Payment Suspension

February 11, 2005 (PLANSPONSOR.com) - United Airlines has notified its retired pilots that it plans to slash their pension payments by as much as 40% until the ultimate future of the air carrier's pension plans is decided in court.
Reported by

United, which has been under bankruptcy protection for two years, is suspending the payments until a US Bankruptcy Court judge decides whether the company can terminate its four pension plans as of later this year or whether the nation’s pension insurer, the Pension Benefit Guaranty Corporation (PBGC), can take over the United Airlines Pilots’ Defined Benefit Pension Plan as of December 31, 2004 (See PBGC Takes Over United Pilot Pension Plan ), Bloomberg reported.

For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.

United Vice President Lynn Hughitt said in a letter to 6,000 pilot retirees that the reductions in the company’s non-qualified pension benefit payments effective March 1, 2005, would be in place until a “resolution of those legal actions.” The airline would later make up payments for the period between suspension and a court-approved plan termination, she said.

United proposed in August to terminate the plans to save $639 million annually to help it reorganize out of bankruptcy protection (See United Considers Scuttling Pension Plans ). Active pilots last month agreed not to oppose a pension termination in exchange for $550 million in convertible notes that the 6,600 active pilots could sell in the capital market to raise money to cover a portion of the pension shortfall they would encounter (See ALPA Agrees not to Fight UAL Pension Termination ).

If United terminates the plans, the PBGC estimated last year that it would assume $6.4 billion in liabilities. The insurer would make limited retirement payments to about 119,000 current and retired United workers, who collectively would lose about $1.9 billion in benefits – the difference between what they would have received from United and the PBGC’s legal payment limits.

United latest move drew a strong response from United retired pilots’ group. “We believe this unilateral action by United is illegal and that United does not have the right to suspend vested pension benefits without Court approval,” the United Retired Pilots Benefit Protection Association said in a Web site statement . “ In this instance, there was no advance notice, no opportunity for discussions, no court proceedings, and no court approval. This action by United clearly shows its arrogance in believing that it can abrogate everyone’s legal rights with impunity.”

The United retired pilots group said in the Web statement that it had asked to be recognized as a legal party in the bankruptcy court case to help fight United’s move.

Unions for mechanics, flight attendants, customer service agents and bag handlers are in negotiations with United on the pension issue, seeking alternatives to a termination. The unions have said they oppose termination and may strike if the carrier tries to impose contract changes through the bankruptcy court.

Compliance February 10, 2005

GOP House Group Files OSHA Reform Package

February 10, 2005 (PLANSPONSOR.com) - A group of Republican lawmakers in the US House of Representatives has introduced a package of proposed changes at the Occupational Safety and Health Administration (OSHA) to give small employers more rights at the agency.
Reported by

A news release from the House Committee on Education and the Workforce asserted that the OSHA package was designed to make sure that OSHA’s “enforcement efforts are fair for small businesses that make good faith efforts to comply with all health and safety laws.”  

The announcement said that the reform package was designed “to remove the arbitrary and unintentional ‘legal traps’ in current OSHA law that hamstring better trust and voluntary cooperation between the agency and employers.”

Never miss a story — sign up for PLANSPONSOR newsletters to keep up on the latest retirement plan benefits news.

The news release said the bills include:

  • The Occupational Safety and Health Small Business Day in Court Act (HR 739) gives the Occupational Safety and Health Review Commission (OSHRC) additional flexibility to make exceptions to the 15-day deadline for employers to file responses to OSHA citations when a small business misses the deadline by mistake or for good reason.   
  • The Occupational Safety and Health Review Commission Efficiency Act (HR 740) increases the membership of OSHRC from three to five members to ensure citation cases are reviewed in a timely fashion.   Because a quorum of two (of the three) commissioners is needed for decisionmaking, OSHRC has in the past been unable to act.  
  • The Occupational Safety and Health Independent Review of OSHA Citations Act (HR 741) restores independent review of OSHA citations by clarifying that OSHRC is an independent judicial entity given deference by courts that review OSHA issues. “The bill restores the original system of checks and balances intended by Congress when it enacted the OSHA law and ensures that OSHRC and not OSHA would be the party who interprets the law and provides an independent review of OSHA citations,” the announcement said.
  • The Occupational Safety and Health Small Employer Access to Justice Act (HR 742) “encourages OSHA to better assess the merits of a case before it brings unnecessary enforcement actions to court against small businesses.”   Under current law, the Equal Access to Justice Act (EAJA) allows small business owners to recover attorneys’ fees if the owner successfully challenges a workplace safety citation.   However, if OSHA can establish that its enforcement action was “substantially justified” or the result of “special circumstances,” small businesses can be refused attorneys’ fees even if OSHA loses the case in court.

“These OSHA reform bills represent critical steps toward improving working safety and leveling the playing field for small businesses by giving them new tools to fight unjust OSHA citations,” said Workforce Protections Subcommittee Chairman Representative Charlie Norwood (R-Georgia) “Small employers should be spending their time creating new jobs and providing safe workplaces, and less on dealing with unending OSHA-related litigation and the escalating attorneys’ fees that result.”

«