Washington: The Pension Benefit Guaranty Corporation today announced an agreement that restores two pension plans to The Renco Group Inc., a privately held investment holding company based in New York City.
Under the agreement, PBGC will restore plans covering 1,350 people who worked at Renco’s former subsidiary, RG Steel LLC, which is liquidating in bankruptcy. PBGC took responsibility for the plans, which had a funding gap of about $70 million, in 2012. The participants in the two plans worked at RG Steel facilities in Wheeling, W.Va. and Warren, Ohio.
The agreement resolves litigation that PBGC brought in the U.S. district court in Manhattan. PBGC alleged that Renco attempted to evade financial responsibility for the RG Steel pension plans by concealing the transfer of its ownership interest in RG Steel.
“The vast majority of companies that sponsor pension plans keep the promises they make, but when companies attempt to evade their obligations PBGC will act to protect participants’ benefits and PBGC’s premium payers from unnecessary losses,” said PBGC Director Tom Reeder. “Our action restores the expectation RG Steel’s former employees have that their promised benefits will be paid and restores the obligation to keep that promise back to the employer.”
In the settlement, Renco agreed to take the plans back as of June 1, 2016, pay all future benefits promised to the former RG Steel employees, and make back payments for benefits not guaranteed by PBGC. Renco also agreed to reimburse the agency for $15 million in benefits that it paid to RG Steel retirees since PBGC took over the plans. Additionally, the company will pay about $35 million in shutdown benefits that would have gone unpaid absent the restoration of the pension plans.
The restoration of the RG Steel plans marks only the second time in PBGC’s history that terminated pension plans were restored to an employer. In 1993, after litigation that reached the Supreme Court, PBGC restored three LTV Steel pension plans.
For more information on the restoration, visit the RG Steel FAQs.
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