The Pension Benefit Guaranty Corp. will assume the pension obligations of Walter Energy Inc., an Alabama-based coal company that is currently in bankruptcy proceedings.
More than 2,700 participants and retirees in the Pension Plan for Salaried Employees of Walter Energy Inc. Subsidiaries, Divisions and Affiliates will have their pensions protected, PBGC said in a statement.
The plan will end on Dec. 31, 2015.
Under PBGC’s single-employer insurance program, the maximum benefit a retiree can receive after the agency takes over a pension plan is $60,136.
The Walter Energy plan is 70 percent funded, with $219 million in assets to cover $314 million in benefits, according to PBGC, which said it is expected to cover the entire $96 million shortfall.
In an opinion issued in U.S. Bankruptcy Court for the Northern District of Alabama, a federal judge also absolved Walter Energy from its pension obligations to 1,200 current union employees and 2,700 union retirees, all members of the United Mine Workers of America.
The judge ruled that Walter Energy would be unable to sell its assets if buyers were required to assume its collectively bargained pension obligations.
That development could have significant ramifications for the United Mine Workers of America Pension Plan.
In October, the Department of Labor sent notice to UMWA trustees and participants that the plan was in critical and declining status, the new designation created under the Multiemployer Pension Reform Act for collectively bargained plans expected to be insolvent in 20 years.
UMWA plan actuaries expect the plan to be insolvent by 2026, according to the notice the DOL sent plan trustees.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
