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Agency Assumes Airline Pensions

April 29, 2006|From the Associated Press

WASHINGTON — A federal agency said Friday that it had taken responsibility for three pension plans covering nearly 4,000 workers and retirees of Aloha Airlines, which recently emerged from bankruptcy protection.

The Pension Benefit Guaranty Corp., which insures private defined-benefit pension plans, estimated that together the three plans were 55% funded, with $190 million in assets to cover $345 million in benefit promises. The agency said it would be liable for $117 million of the $155-million shortfall.

The Honolulu-based carrier filed for bankruptcy protection in December 2004 and had sought court approval to terminate its pension plans. A court-approved settlement in February between Aloha and the pension agency allowed the three plans to be terminated.

The agency has reported a deficit of $22.8 billion. Failed steel and airline companies that have transferred pension plans to the agency have been a major factor in its swollen liabilities.

The agency is funded by insurance premiums paid by companies that have pension plans. It also earns money from investments and receives funds from pension plans it takes over.

The House and the Senate have passed legislation to deal with the nation's troubled pension system, but they need to work out differences between their bills.

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