4 Md. employers in top 50 for underfunded pensions

February 26, 1991|By Kim Clark

Four of Maryland's largest employers were listed yesterday as companies with unusually large gaps between what they owe to their workers for their pensions and what they have set aside.

The Pension Benefit Guaranty Corp., a 17-year-old governmental agency that backs up pensions for U.S. workers, said Bethlehem Steel Corp., Cyclops Industries Inc., Westinghouse Electric Corp. and General Motors Corp. are among the 50 companies with the biggest unfunded pension liabilities nationwide.

Jane Hoden, a spokeswoman for the agency, said yesterday that many of the companies on the list will have no difficulty meeting their pension obligations. Many with underfunded pension funds can easily make their payments to current retirees but simply haven't yet set aside everything they will need to pay off all vested workers in the future, Ms. Hoden explained.

But she added that the agency thinks it might have to bail out more than half of the companies on the list, especially those having financial difficulties.

Her agency has plenty of cash to meet its current obligations, she said, but if worse comes to worst, the agency's total liability could reach $30 billion.

Though she would not name the companies the agency thinks it might have to pay out benefits for, companies meeting her definition include LTV Corp., a financially troubled steel company, and Continental Air Holding Corp., which recently took over the planes of bankrupt Eastern Airlines.

Ms. Hoden noted that the list of 50 is dominated by three industries that have reported significant losses in the last several years: steelmakers, automakers and airlines.

Though the workers themselves will receive the bulk of their pensions even if their companies call on Pension Benefit Guaranty for help, Ms. Hoden said, she advises employees of all listed companies to "find out why their pension is underfunded and encourage their company to better fund their retirement plan."

This is the second time the agency has published a list of the most underfunded pension plans. Thirty-eight of the companies, including most of the cited Maryland employers, have stayed on the list since last May, but Armco Inc., which owns a steel mill on East Biddle Street, has been removed, and Cyclops has taken its place. Cyclops recently agreed to be taken over by Armco.

Spokesmen for the four listed companies with large operations in Maryland said they expect to have no problem paying their retirees.

Terry Sullivan, a spokesman for General Motors in Detroit, noted that his company was 50th on the list and has funded nearly 95 percent of its liability, which means it has set aside enough money to pay 95 percent of the pensions for all vested employees.

And a spokesman for the union that represents the approximately 3,100 hourly workers at GM's minivan plant in Baltimore said the union considers the autoworkers' pensions to be safe.

Paul Jones, a spokesman for Westinghouse, which has 17,000 employees in Maryland, said the company is near the bottom of the list and has been adding more money to its pension fund than necessary to reduce its unfunded liability. Westinghouse "stands behind . . .the pension contract between the corporation and its employees," he said.

Henry Von Spreckelsen, a spokesman for Bethlehem, said his company is reducing its unfunded pension liability from a 1986 high of $1.7 billion and thinks the list is "counterproductive."

Bethlehem, which ranked 33rd on the list, has funded less than 73 percent of its total pension liability and eventually will have to cover $1.2 billion in additional pension costs, Pension Benefit Guaranty said.

Ed Romanov, a spokesman for Cyclops, which owns Eastern Stainless Steel, said the list does not reflect his 600-worker company's financial well-being.

"The benefits will be paid," he said.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.