$150 Million More to Alcoa’s Pension Plans Per PBGC Agreement
The Pension Benefit Guaranty Corporation (PBGC) on Oct. 11 announced that $150 million more
will be provided to Alcoa’s two largest pension plans under an agreement it has reached with the company.
The PBGC’s move affects the more than 83,000 individuals those plans cover. Alcoa has six other pension plans, and the eight collectively cover more than 102,000 employees and retirees. The two largest plans account for 91% of Alcoa’s pension obligations.
On Sept. 28, 2015, Alcoa announced that it intended to split into two publicly traded entities, Arconic and Alcoa. Arconic will carry approximately $9 billion in long-term debt after the split. This debt, in addition to the financial condition of the two largest plans, created the potential for additional risk to the pension plans and the company itself. Arconic will provide the additional $150 million to the plans.
The agreement was arrived under the PBGC's Early Warning Program, in which the agency monitors companies with large, underfunded DB plans to identify corporate transactions that could jeopardize pensions.