UK - Northwest Airlines Corporation has made contributions equivalent to $369m to its contract employee, pilot and management pension plans, but mostly in stock.
Generally the Employee Retirement Income Security Act (ERISA) prohibits ‘in-kind’ contributions except under certain statutory exceptions, or if the Labor Department grants an exemption that protects the interests of workers and retirees covered by the plan.
Following just such a ruling from the US Department of Labor’s Employee Benefits Security Administration in August, Northwest has been granted permission to make contributions in stock in lieu of cash.
The company has made a voluntary $190m contribution of Pinnacle stock to the pilot pension plan. Pinnacle Airlines Corporation is wholly owned by Northwest and its stock is not publicly traded.
In order to fulfill last year’s required contributions on the contract employee and management pension plans, Northwest injected $179m, consisting of $119m in Pinnacle stock and $60m in cash.
According to the US Department of Labor, an independent fiduciary has been retained by the pension plans to establish the fair market value of the Pinnacle stock and to determine that the stock is a prudent investment for the plans.
The plans will receive financial protection and governance rights as negotiated by the independent fiduciary on their behalf.
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