Hear That Sound?

That's the sound of thousands of United Airlines workers grinding their teeth as the Pension Benefit Guaranty Corporation is assuming their pension plan. More than 36,000 active and retired United Airlines ground employees will be affected by the news announced Friday.

"United's deliberate course of action and absence of concern for its employees is directly responsible for the pension crisis we are facing today," said IAM General Vice President of Transportation Robert Roach, Jr. in a prepared statement. "Instead of terminating pensions, maybe we should explore terminating the employment of United's top management who have mired the company in bankruptcy for more than two years."

"United's pension plan for its ground employees is only 30 percent funded, the company has missed $363 million in legally required contributions, and management has repeatedly stated its intention to terminate the plan," said PBGC Executive Director Bradley Belt in a news release. "This action was necessary at this time to protect the pension insurance fund against further losses."

"The decision to end a pension plan is never an easy one," said Belt. "But we must do everything we can to preserve our ability to pay benefits to the more than 1 million Americans who depend on us for their pension benefits. This is especially true in light of the program's current deficit."

Retirees will keep getting their monthly checks, and other workers will get their pension when they retire. However, federal pension laws and benefit caps dictate that many higher paid retirees will get lower benefits than what they were promised. The current plan has only $1.2 billion to cover $4.1 billion in promised benefits. The PBGC is going to contribute $2.1 billion of the $2.9 billion that United did not place in the plan.

The Machinists Union will be meeting with United and the PBGC on March 14 to discuss plans to protect their member's pensions. "If we are successful, the PBGC can abandon its attempt to terminate our members pensions," said Randy Canale, President of IAM District 141. "Failure by United to reach an agreement with the IAM could lead to strike action against the carrier."

FMI: www.pbgc.gov, www.iam141.org