The agency's conservative approach means more money is needed today to pay for retirees. As a result, PBGC claims in bankruptcy cases often catch other creditors off guard, said Joseph House, a principal at Palisades Capital Advisors and former head of the PBGC's restructuring group.
The company has said in court documents that retaining highly specialized engineers is key to its success, and until it filed for bankruptcy in March the pension was one way to hold on to top talent.
Ending the plan would mean more Westinghouse debt and less for other creditors, and it could mean reduced benefits for the plan's participants. If the plan is terminated, participants will receive a guaranteed benefit from the PBGC, which currently hits a maximum at about $64,000 a year. Any annual pension payments above that level could be lost, although there are exceptions.
A former Westinghouse executive, who asked not to be identified talking about his former employer, said the PBGC claim came as a shock, given the plan's funding levels in recent years and conservative investments.
"You're going to have a lot of discontent," said the executive. "It's a great tool to keep people tied to the company."
Westinghouse, however, is in cost-cutting mode. The company said in its recent turnaround plan it would reduce its roughly 11,000 global staff by 7 percent. In July, two utilities in South Carolina canceled a half-finished nuclear power plant that was meant to be a showcase for Westinghouse's engineering and design. The South Carolina project and a similar half-finished plant in Georgia were both billions of dollars over budget and years behind schedule, which contributed to Westinghouse's bankruptcy.
This article was provided by Reuters.