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PBGC TAKES ACTION TO PROTECT CF&I STEEL PENSIONS

 PBGC TAKES ACTION TO PROTECT CF&I STEEL PENSIONS
 WASHINGTON, March 19 /PRNewswire/ -- The Pension Benefit Guaranty


Corporation (PBGC) has moved to protect the pensions of 4,200 workers and retirees of the CF&I Steel Corp. by taking over and trusteeing their large pension plan, which is underfunded by approximately $270 million.
 "The PBGC safety net will make sure retirees receive their benefits without interruption and as guaranteed by law," said PBGC Executive Director James B. Lockhart. "CF&I can no longer afford their pension payments. This action protects the insurance program from incurring even greater losses and gives the company a chance to restructure while protecting workers' pensions," he said.
 CF&I, administrator of the pension plan, agreed to the termination of CF&I's large defined benefit plan (The Pension Plan of CF&I Steel Corp. and Certain Subsidiaries) and to the appointment of the PBGC as trustee, effective March 19. PBGC determined the plan failed to meet minimum funding requirements, with no contributions made to the plan since July 1990, and in the future would be unable to pay benefits. In addition, long-run losses to PBGC would be expected to increase unreasonably if the plan were not terminated. The plan is only some 10 percent funded with approximately $30 million in assets and $300 million in liabilities.
 Of the 4,200 plan participants, 1,500 are retired. A majority of the retirees are expected to receive the same benefits they are now getting. However, based on preliminary information, it appears that some of the supplemental benefits received by early retirees will not be covered by PBGC although basic benefits will continue up to the limits set by law. Some highly compensated, longer service individuals may receive reduced benefits due to maximum guarantee benefit limitations.
 CF&I is expected to continue day-to-day administration of the pension plan under PBGC supervision. Benefit payments to current retirees will continue uninterrupted. Participants should continue to follow previously existing procedures to apply for retirement until notified otherwise. Plan participants and retirees can call the CF&I Benefits Administration office at 800-525-8709 for information. For residents in area code 719, the number to call is 561-7354.
 Lockhart said the CF&I case also demonstrates the inadequacy of the pension funding requirements because the company had made all required pension contributions through July 1990, but was grossly underfunded nevertheless. "This case points out the urgent need for immediate legislative changes to improve pension funding and to keep pensions solvent," Lockhart said.
 The Bush administration has proposed legislative changes that would improve minimum funding requirements. In addition, the administration is seeking to clarify and improve PBGC's position in bankruptcy to reduce losses in the event of terminations and require companies to continue contributing to pension plans while in bankruptcy. CF&I did not make pension contributions after filing for Chapter 11.
 CF&I will remain responsible for a smaller pension play (The Noncontributory Pension Plan of CF&I Steel Corp.), underfunded by $6 million, that has assets to pay benefits for some time. The plan covers employees of a now-closed New Jersey facility. PBGC is prepared to act quickly to terminate the plan if necessary in the future.
 The steel company, whose principal place of business is in Pueblo, Colo., and its nine subsidiaries filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code on Nov. 7, 1990, shortly before PBGC would have been allowed to obtain statutory liens against the company for missing its required pension payments.
 PBGC is a federal agency created by ERISA to guarantee payment of basic retirement benefits earned by American workers participating in private defined benefit pension plans. PBGC administers two insurance programs, which cover nearly 40 million workers and retirees in about 85,000 pension plans.
 -0- 3/19/92
 /CONTACT: Judith E. Bekelman, director, communications and public affairs, or Jane Hoden, public affairs specialist, of PBGC, 202-778-8840/ CO: Pension Benefit Guaranty Corporation; CF&I Steel Corp. ST: Colorado IN: INS SU:


SB-MK -- DC021 -- 9738 03/19/92 13:38 EST
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Date:Mar 19, 1992
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