U.S. Sen. Evan Bayh, D-Ind., is requesting a Congressional review of the means by which the Pension Benefit Guarantee Corporation (PBGC) estimates retiree benefits for the pension plans it insures, after many retirees who worked for Republic Technologies International (RTI) were notified in March that they would be receiving cuts in their monthly pension plans.

According to a statement released on Tuesday, RTI—which operated several plants in Northwest Indiana—declared bankruptcy in 2001 and in 2002 RTI terminated its pension plans for 3,000 employees in Indiana, Ohio, Illinois, New York, and Pennsylvania. PBGC assumed immediate control of the company’s pension plan, but final benefit determinations were not made until this spring, almost six years later.

“As a result of the delay,” the statement said, “some Hoosier retirees who worked for RTI are facing decreases in monthly benefit payments of up to 70 percent, or as much as $1,000 month.”

“Hoosier retires facing steep and sudden cuts in their pension benefits deserve some answers,” Bayh said.

Bayh is asking the Government Accountability Office (GAO), Congress’ investigative arm, to examine PBGC’s process for estimating initial benefits and to report on why there have been lengthy delays in making final benefit determinations. He is also asking GAO to study discrepancies between negotiated and guaranteed benefits for retirees whose pension plans come under PBGC control. Finally, Bayh is seeking clarification on the speed and accessibility of the PBGC appeals process.

In a letter to the GAO Acting Comptroller, Bayh wrote that he is “deeply concerned about the impact this process has on pension recipients who have suffered lost paychecks, health benefits, and retirement security in the face of economic volatility and outsourcing.”

Posted 7/2/2008