The Coronavirus Aid, Relief and Economic Security Act, signed by the President on March 27, provided companies the option of a one-year holiday from making 2020 pension contributions, with interest accrued, until Jan. 1, 2021. Normally Frontier would make these contributions quarterly, however, The CARES Act now allows them to pay the pension contribution (including interest) all at once by January 1, 2021. Frontier had said that they would make the payment by December 31, 2020.
On June 29, 2020 Frontier requested from the IRS a Pension Funding Waiver to delay the above-mentioned pension contributions for 2020. If this funding waiver gets approved by the IRS, the 2020 pension contributions would be deferred and required to be paid to the plan with interest over the next 5 years (2021-2025) in addition to the required pension contributions for those plan years. Again, this request for the funding waiver must be approved by the IRS. Frontier is saying that they expect a decision from the IRS by the end of 2020 or early 2021.
Here are a few examples of the information provided by Frontier in their FAQ document:
- When Frontier emerges from Chapter 11, the plan may remain subject to full restrictions on lump sum and certain similar distributions if the funding level is less than 60%, or the plan may be subject to partial restrictions if the funding is at least 60% and less than 80%.
- Your current accrued benefit, which is the amount of benefits you are entitled to under the plan will not be reduced by the funding waiver. The funding waiver will also not affect your ability to accrue additional plan benefits if you are currently eligible to accrue benefits under the plan terms.
- If you are currently receiving monthly annuity payments, the funding waiver would not affect the benefits that you are receiving from the plan. The plan will continue to pay monthly annuity checks. Under federal law, the assets in the plan are held in a "trust" and are not available to the company or its creditors.
- Frontier has stated that they intend to pay all required PBGC premiums on a timely basis. A funding waiver would not affect Frontier's required PBGC premium payments or the PBGC's guarantee of benefits.
Click here for the full FAQ document provided by Frontier regarding the Pension Funding Waiver Application.
CWA and the IBEW have filed a joint objection to Frontier paying their executives $38 million in bonus money. The Secured Creditors Committee that represents both unions in bankruptcy court has also filed an objection to this payment.
CWA on a National level is reviewing all of the information to continue to provide further details to our members.
If you have any questions, free to contact Secretary-Treasurer Louise Gibson at firstname.lastname@example.org