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Pensions?

lumax

Well-known member
Joined
May 5, 2002
Posts
206
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1,111
Just curious what affect an airline filing for Bankruptcy protection has on ones pension? i.e someone who is or is about to retire?

Thanks
 

typhoonpilot

Daddy
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Feb 24, 2002
Posts
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Lumax:

A very good question that requires a detailed knowledge of Pension law that is best answered by your retirement and insurance committee.

This question has been asked repeatedly where I work. I can't even begin to understand the complexities of the law, but essentially those laws have changed since the days of Eastern and it's demise. The pension plan is a separate entity and, as I understand, can not be touched by creditors or even the company. It requires company contributions to stay healthy though, especially in a down market.

In the case of a Chapter 11, it almost certainly will not be getting any funding thus becoming underfunded. When and if the company emerges from Chapter 11 they would start funding it again and in time it should become healthy.

In the worst case scenario where a company ceases operations and liquidates the pension would be taken over by the Pension Benefit Guarantee Corporation ( the governement ) and they would administer the assets. There are rules that give priority to participants that are already retired and then those about to retire and so on.

typhoonpilot
 

Clearsky

Well-known member
Joined
Mar 25, 2002
Posts
66
Total Time
300
..and if you have a 401(k) that is protected too. Hopefully, you don't have alot of company stock.
 
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