Government pension agency to make up $96 million shortfall in retirement benefits for Walter Energy&
By Kelly Poe | kpoe@al.com
Walter Energy's coal mining retirees will get their benefits after all - but not by Walter Energy.
The Birmingham-based metallurgical coal producer was granted permission to end healthcare and other benefits for its union retirees last week. But the Pension Benefit Guaranty Corporation, a U.S. government agency, announced it would assume the benefits for more than 2,700 current and future retirees.
The Walter Energy plan is about 70 percent funded, according to estimates from the PBGC. The agency plans to cover the $96 million shortfall.
After the coal company declared Chapter 11 bankruptcy protection in July, it entered into an agreement to sell its assets to a company composed of its biggest lenders. It has since asked the court to be allowed to eliminate its contracts with the unions, arguing that the potential buyer wouldn't purchase the company with those obligations intact.
The PBGC will pay all pension benefits up to the legal maximum of $60,136 for a 65-year-old.
"The agency is stepping in because Walter Energy plans to sell the majority of its assets in bankruptcy proceedings and the potential buyers have signaled they will not assume the pension plan," The agency said in a press release.
The Employee Retirement Income Security Act of 1974 created the PBGC, which protects benefits in private-sector defined benefit plans.
In December, Walter was given permission to end its non-union retiree benefits.
Last week, Walter Energy announced it would temporarily lay off 319 people, leaving 24 mine workers at its No. 4 mine in Brookwood.