Canton Repository

October 2, 2003

Pension guarantor to appeal ruling

By Paul M. Krawzak
Copley Washington correspondent

WASHINGTON — The Pension Benefit Guaranty Corp. plans to appeal a court ruling that provides “shutdown” benefits to an estimated 2,500 steelworkers who lost their jobs at Republic Technologies International, the PBGC said Wednesday.

The appeal casts into doubt about when, or if, the benefits triggered by the company’s closure last year would be paid. RTI, which was based in Fairlawn, Ohio, ceased to exist Aug. 16, 2002.

Renamed Republic Engineered Products after a group of investors being purchased it, the former RTI continues to produce steel at plants in Canton, Massillon and Lorain and other states.

The PBGC, a federal corporation that guarantees retirement benefits for 44 million American workers, railed against a federal court ruling allowing steelworkers to collect the shutdown benefits.

“RTI never set aside any money to pay for these benefits and never paid any premiums to the PBGC to insure them,” PBGC Executive Director Steve A. Kandarian said. “It is unfair to make other companies pick up the tab for these unfunded promises.”

A spokesman for the PBGC said the agency was still determining whether to pay shutdown benefits while the appeal proceeds or whether to wait until it is resolved.

The United Steelworkers plans to contest the appeal. It represents former RTI workers in Ohio, Illinois, Indiana, Pennsylvania and New York who could be eligible for the benefits.

Union members at RTI “gave their entire working lives to this company in the expectation that they would receive shutdown pension benefits if the company went out of business,” said Leo W. Gerard, international president of the Steelworkers.

Shutdown benefits provide an immediate monthly payment to workers who are too young to retire and begin collecting regular pension payments when their companies close. The payments are likened to early retirement benefits.

“I’m optimistic that they (the PBGC) can’t win,” said Bill Dieffenbaugher of Massillon, one of the steelworkers who lost his job at RTI and is eligible for shutdown payments. “They can’t prove that by paying us those modified pensions that it’s going to bust the PBGC.”

Dieffenbaugher, a former officer in Local 1124 in Massillon, estimated Wednesday that the Canton-Massillon area is home to 750 to 1,000 people who would be eligible for benefits under the court ruling.

Another 400 or so former RTI employees in Lorain would be eligible for benefits, said Dave McVey, a training coordinator at Local 1104 in Lorain.

A union attorney estimated shutdown benefits at $1,500 to $2,000 a month. But Jacqueline Kiedrowicz, president of steelworkers Local 1200 in Canton, said the figure is lower for ex-RTI workers in Canton.

When the PBGC took over the pension plan at RTI in June 2002, it became responsible for the retirement benefits for about 6,000 former RTI employees.

But the agency said that because it terminated the pension plan before the company closed, it was not responsible for paying shutdown benefits to employees who had less than 30 years with the company.

In ruling in favor of the shutdown payments, U.S. District Court Judge Peter C. Economus in Youngstown said the workers’ expectation that they would receive the benefits outweighed the PBGC’s argument that paying the benefits would harm “the overall stability” of its insurance fund.

The PBGC said paying shutdown benefits would cost an additional $96 million over the life of the benefits.

Kandarian said being forced to pay shutdown benefits “will further weaken a pension insurance system that is already billions of dollars in the red.”

Republic Engineered Products released a statement saying it was pleased by the court’s ruling. RTI, which filed the lawsuit leading to the decision, did not return reporters’ phone calls seeking comment. The steelworkers union intervened in the lawsuit on behalf of its members.