(PAI) - Some union employees of United Airlines had their financial world rocked earlier this month when a federal bankruptcy judge allowed the struggling airline to dump a record $6.6 billion in pension obligations onto the Pension Benefit Guaranty Corp. (PBGC).

The decision, which is being appealed, raised red flags throughout Wall Street, Washington D.C. and in union halls across the nation. The reasons:

• The federally backed PBGC is already under-funded to the tune of $23.3 billion, while owing $62.3 billion. Overall, corporate defined pension benefit plans guaranteed by the PBGC are under-funded by $450 billion.
• Federal legislators are looking at ways to prevent other financially strapped companies from dumping their pension obligations on the federal government.
• And union retirees from United are faced with reduced future payments as a result of the bankruptcy judge's ruling.

Machinists President Tom Buffenbarger warned his union's legislative conference that United could be the first of many. "Even as late as last year, if you had a good, employer-provided defined benefit pension plan, you felt good," he said. "Today, our brothers and sisters in the airlines don't know if they will have that. Companies like United, US Air, Delta and American are thinking they can walk away" from pensions.

As for bankruptcy judge Eugene Wedoff's decision, Buffenbarger said "judges aren't there for you" on pensions. "They're there for the CEOs."

According to the Wall Street Journal, "the vast majority" of the 1,381 U.S. companies that terminated their defined benefit pension plan in 2004 were fully funded at the end, meaning workers would receive 100 percent of their benefits.

However, 192 pension plans were taken over by the PBGC last year, and this year United joins those ranks. United, in deep financial straits, said turning pension obligations for some 45,000 active and 65,000 retired or transferred workers over to the federal Pension Benefit Guaranty Corp. would save the company $645 million.

The maximum yearly pension PBGC pays to a covered worker is $45,613 per year, if the worker retires at 65 after long service. United retirees would lose any money owed to him or her above that amount. In addition, plans usually call for freezing the level of benefits for current employees.

In return for taking over the United pensions, PBGC gets $1 billion in United notes and convertible stock and a promise of $500 million more if United meets financial targets.

"How many companies have to fail, how many companies have to abandon their pension plans, how many companies have to downsize their pension benefits before President Bush and Congress pay attention?" asked U.S. Rep. George Miller. "We've been trying for years" to fix the problem, he told a press conference with United's Flight Attendants and Machinists. "But despite Enron scandals and pension collapses, there's been no action to really protect employee pensions."

A pension bill introduced by four Democrats in Congress after the judge's May 10 ruling would ban "lavish retirement golden parachutes" for executives who cut workers' pension benefits, the legislators said. It also would require full corporate disclosure to workers of executive compensation plans and would link the fate of benefits in those plans to those of rank?and?file workers.

Congress is also considering raising the premiums on companies that use the PBGC as a safety net. The Wall Street Journal said employer groups warn that they will freeze or end their plans if they have to pay higher premiums.

Miller noted that while then-United CEO Glenn Tilton ran the airline into bankruptcy in 2002, Tilton got its board to establish a special $4.5 million bankruptcy-protected trust for him last year - three months before United went broke.

United for a Fair Economy, a pro-labor think tank, noted executives of corporations with $131 billion in unfunded pension liabilities paid themselves $352 million, combined, last year.