THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Thursday, December 7, 1995 TAG: 9512070359
SECTION: BUSINESS PAGE: D6 EDITION: FINAL
SOURCE: ASSOCIATED PRESS
DATELINE: WASHINGTON LENGTH: Short : 42 lines
Three Virginia-based companies are included in a government ranking of the 50 largest underfunded, federally insured pension plans in the country.
The companies are CSX Corp. and Reynolds Metals Co., both based in Richmond, and Arlington-based USAir Group.
The shortfall among the 50 pension plans shrank a dramatic 66 percent in 1994, the first reduction since the government began listing the deficits seven years ago.
Major underfunding totaled $13.5 billion in 1994, down from $39.7 billion in 1993, because higher interest rates boosted earnings and plan sponsors improved funding, the Pension Benefit Guaranty Corp. said Wednesday.
The PBGC bases underfunding on the value of assets that would be needed to pay guaranteed benefits if a plan is terminated and taken over by the agency.
CSX has a potential shortfall in unfunded guaranteed benefit liabilities of $163 million. The pension plan has assets that amount to 84 percent of its liabilities. For Reynolds Metals, the figures are $55 million and 89 percent. For USAIR, they're $139 million and 85 percent.
Although people in most underfunded plans are covered by PBGC insurance, many remain at risk because the agency's guarantee is limited this year to $2,573.86 a month.
The agency emphasized that inclusion on its annual list does not mean a pension plan poses an immediate risk. But it pointed out that 70 percent of the underfunding - $9.5 billion - was in companies with below-investment-grade bond ratings.
The Retirement Protection Act of 1994 requires most large companies with plans less than 90 percent funded to give workers and retirees an explanation of their plan's funding status and the limits of PBGC guarantees by year end. Smaller companies must provide the information beginning next year. by CNB