U.S. Agency Moves to Take Over Pilots' Pension at United Airlines


2005-1-6

I'm Gwen Outen with the VOA Special English Economics Report.

Last week, a government agency in Washington announced that itwanted to take over a retirement plan for pilots at United Airlines.This pension plan is supposed to hold nearly six thousand milliondollars. But it has about half that, and United is in financialtrouble.

Retired Americans get some money each month from Social Security.This is a federal program financed by employment taxes. But millionsalso depend on retirement plans offered by employers.

One such plan is called a four-oh-one-k, named after part of thetax law. Both the employee and the employer pay into the plan. Themoney they put in is not taxed. It is invested in stocks and otherproducts. How much a retired worker gets depends on how much theinvestments return.

But a pension guarantees the amount that a person will receive.Pension plans are no longer very common.

Federal law requires employers to keep enough money in pensionsto meet expected payments in the future. In the nineteen nineties,many companies did not need to pay into their pensions. A strongeconomy meant that pension-plan investments were enough. But sincethen, employers have had to make big payments. Some have found thisdifficult.

United Airlines says it can no longer pay into the pension forits pilots. The company also says it does not know if it cancontinue to pay into three pension plans for thousands of otheremployees. United is under bankruptcy protection from its creditors.

The Pension Benefit Guaranty Corporation is a government agency.It has insurance programs paid for by employers. It also earns moneyfrom investments. This agency takes control of pension plans thatfail or are in danger of failing. Its job is to make sure workersreceive their money.

Now the agency wants to block an agreement between United and itspilots union. That agreement would end the current pension plan. Inreturn, the pilots would get an interest in the company once itleaves bankruptcy.

The Pension Benefit Guaranty Corporation says it is trying toprotect United employees. The agency also wants to limit how much itmight be responsible for if United cannot pay its pensions.

Creditors of the airline support the move. But the pilots unionopposes it. The pilots could lose one hundred forty million dollarsif a court approves an immediate takeover of their pension.

This VOA Special English Economics Report was written by MarioRitter. I'm Gwen Outen.