WARREN - The government-run Pension Benefit Guaranty Corp. is taking over pension benefits for more than 1,200 current and future retirees of RG Steel's former Warren plant.
The PBGC announced the takeover this week, noting that it will pay pension benefits earned by the organization's retirees up to legal limits. For a 65-year-old retiree, that could mean a maximum guarantee limit of up to $56,000 a year.
But younger retirees who may have started collecting pensions after working 30 years, for example, may see their pension incomes cut, said United Steelworkers Local 1375 president Darryl Parker, perhaps by as much as 50 percent.
''Because our parent company never funded up our pension plan, this put us in this position,'' Parker said Thursday. ''It will impact everyone's pension that is not 60, 62 or 65. This has had a grave impact on our membership.''
He estimated it was underfunded by at least $70 million.
Parker and John Saunders, United Steelworkers former co-chair for the health care and benefits committee for RG Steel, said the pension fund has been underfunded for years, even before the plant was operated as RG Steel by the Renco Group.
''We are committed to Warren and Wheeling retirees,'' said Saunders, who now serves as trustee for the former Wheeling RG plant's Voluntary Employee Beneficiary Association, or VEBA, and as a consultant for the Warren plant's VEBA.
''They went through a life-changing event when they lost their benefits out of nowhere,'' he said.
RG Steel, which was the nation's fourth largest steelmaker, filed for Chapter 11 bankruptcy protection in May, and since then has liquidated its assets, including the Warren plant on Pine Avenue.
A new owner, BDM Warren Steel Holdings LLC, has committed to attempting to reopen the plant, but is searching for an operator, and the plant's future remains unclear.
The PBGC has trusteed the two pension plans that RG sponsored - the RG Steel Warren, LLC Hourly Employees Pension Plan and the RG Steel Wheeling, LLC Pension Plan. PBGC initiated termination in September in the bankruptcy proceedings because of the bankruptcy liquidation and the forthcoming abandonment of the pension plans.
The bankruptcy court judge overseeing the case in Delaware federal court approved the transfer to the PBGC last month. The existing pension plans were terminated Nov. 13, and the PBGC assumed responsibility for the pension plan as its statutory trustee.
According to the PBGC, the Warren plan has 1,208 participants. The Wheeling plan has 146 participants.
Nationwide, the PBGC handles the retirement incomes of more than 44 million American workers in more than 27,500 private-sector defined benefit pension plans.
It is funded by insurance premiums from employers that sponsor insured pension plans, earns money from investments and receives funds from pension plans it takes over.