Airline workers fear pension plans will end

MINNEAPOLIS -- Murray Specktor, a first officer who flew Boeing 747-400s on Northwest Airlines' Asian routes, took early retirement this year at 52, knowing he wouldn't get a huge pension. But now that the carrier has filed for bankruptcy protection, he fears his monthly payments will be slashed.

''I retired with a reasonable expectation that the pension I retired on would be available to me."

Northwest and Delta Air Lines, both filed for Chapter 11 bankruptcy Sept. 14. Northwest officials have said they hope to preserve the pension benefits employees have accrued. Delta officials have not said they plan to end their plans, but that their future will depend on the airline's ability to fund them.

If Specktor's fears come true and the carriers take the next step of turning over the plans to the federal government, tens of thousands of other highly-paid employees and retirees at the carriers could face sharp pension cutbacks.

The Pension Benefit Guaranty Corp., the agency set up to guarantee retiree pensions, already has raised red flags about its own solvency after having thousands of pension plans dumped on it by steel makers, other airlines, and number of other firms.

Adding to the PBGC's strain, say some insiders, is a category of corporate turnaround specialists known as vulture investors, for whom jettisoning the underfunded pension plans of troubled companies is a common strategy.

When the government takes over a pension plan, payouts usually don't change. But with airlines, pilots and sometimes other workers can take big hits because when a plan is turned over to the PBGC, US law limits annual pension payments for plans canceled in 2005 to $45,613 for people who retire at 65. Pilots must retire by 60, but since the rules that govern the PBGC penalize retirements before 65, their maximum annual payment in a plan canceled this year would be $29,649.