Pension Funding Equity Act of 2004

Here’s the news: 
As we shared with Delta people recently, Delta filed an application with the IRS on Sept 30, 2004, to take advantage of a federal program introduced earlier this year, the Pension Funding Equity Act of 2004 (PFEA). PFEA allows companies in the airline and steel industries to defer up to 80 percent of certain contributions, known as Deficit Reduction Contributions (DRC), in the 2004 and 2005 plan years. For the 2004 plan year, Delta has filed an election to defer these DRC payments for both the Delta Retirement Plan and the Delta Pilots Retirement Plan. A decision regarding the 2005 plan year will be made at a later date. 
        Delta has mailed a letter to participants in both retirement plans to explain how this affects Delta’s contributions to the plans.

Background
As required by law, Delta reviews the funded status of Delta's retirement plans annually on July 1 and determines appropriate contributions to the plans in accordance with ERISA requirements. Delta has met its calendar year 2004 pension funding requirements. The company contributed $325 million in the Delta Retirement Plan and $115 million in the Delta Pilots Retirement Plan. Delta's pension plans currently meet minimum funding requirements under ERISA (the Employee Retirement Income Security Act).
        The funds in a qualified pension plan, like the Delta Retirement Plan, are protected under federal law against the claims of creditors in bankruptcy court proceedings. In the event of a filing for reorganization under bankruptcy law, pension plans are not automatically terminated. Pension plans cannot be terminated unless they meet the standards for termination set out by federal law.

Key points to share with employees
  • Companies are required to make "regular  contributions to their defined benefit pension plans as well as "additional contributions  to plans that are underfunded, often referred to as Deficit Reduction Contributions (DRC).
  • As permitted under the Pension Funding Equity Act of 2004, Delta has made a special election that defers the amount of contributions that are required to be made for the 2004 plan year to the Delta Retirement Plan and the Delta Pilots Retirement Plan. 
  • A decision regarding the 2005 plan year will be made at a later date. 
  • Delta believes it is a prudent financial step under our current circumstances to take advantage of the short-term relief offered by the new legislation. 
  • Delta's pension plans currently meet minimum funding requirements under ERISA (the Employee Retirement Income Security Act)
  • The company contributed $325 million in the Delta Retirement Plan and $115 million in the Delta Pilots Retirement Plan
  • Both retirement plans are insured by the PBGC (the Pension Benefit Guaranty Corporation), which generally guarantees a certain level of retirement benefits provided through qualified pension plans.
  • The content in the letter sent to plan participants is required by law.  The notice includes information about the PBGC and the benefits they guarantee in the event of a plan termination.  We were required to include this information in the notice.  It does not mean we have, or currently intend to, terminate the plans.
  • Employees can go to www.pbgc.gov for more information about PBGC guidelines. They may also review the Delta Benefits Handbook for more facts on plan termination.
  • For further assistance, employees may call the Employee Service Center at 1-800-MY DELTA between 8 a.m. and 5 p.m. ET.