October 1, 2003
Former RTI steelworkers win benefits
By PAUL M. KRAWZAK
Copley Washington correspondent
WASHINGTON — A federal judge ruled Tuesday that some 2,500 former employees of defunct Republic Technologies International have the right to collect “shutdown” benefits from a government agency that has withheld them up to now.
The decision is a victory for the United Steelworkers and a loss for the Pension Benefit Guaranty Corp., which said paying the benefits would cost an additional $96 million.
In a long-awaited decision, U.S. District Court Judge Peter Economus in Youngstown said the PBGC “failed to demonstrate that (its effort to avoid paying shutdown benefits) adequately protects the PBGC insurance fund from an unreasonable increase in liability.”
Shutdown benefits are like early retirement for displaced workers who are too young or do not have enough years with a company to begin collecting their pensions.
The ruling makes some 2,500 former RTI employees eligible for $1,500 to $2,000 a month in early retirement benefits, said David Jury, assistant general counsel for the steelworkers.
Some of those eligible employees still are out of work, but others found a job with Republic Engineered Products, the name given to the former RTI when a group of investors purchased it.
As with RTI, Republic Engineering is based in Fairlawn. Republic operates former RTI plants in Canton, Massillon and Lorain, as well as in Indiana and New York.
“It’s a significant event,” Jury said of the ruling. “This is really the relief that we have been seeking.”
The PBGC has the right to appeal the decision to a federal appellate court. Neither the PBGC, nor representatives of Republic Engineered Products or RTI, were available to comment after the decision was released late in the day.
The PBGC had terminated RTI’s underfunded pension plans, which covered unionized and salaried employees, on June 14, 2002.
Because the termination occurred two months before RTI closed Aug. 16, 2002, PBGC attorneys said the agency was not required to pay shutdown benefits.
At the time, Gary Pastorius, a spokesman for the PBGC, said the agency acted to limit its liability “to prevent unreasonable increases in long-run losses to the federal insurance program.”
The PBGC reported a deficit of $3.6 billion last year, the court said.
When the PBGC took over the RTI plan, it said the company had set aside $165 million to pay pensions, $310 million short of the estimated $475 million long-term cost of the program.
The PBGC terminated the plan after RTI had failed to make payments designed to bolster its pension fund.