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A federal appeals court rejected arguments Friday that the federal government should pay employees of a failed manufacturer “shutdown pensions” that union officials said were promised in a labor contract. The 6th U.S. Circuit Court of Appeals’ ruling denies payments of $1,000 to $2,000 per month to about 2,500 former employees of Republic Technologies International LLC, a northeast Ohio manufacturer of steel bars that closed in 2002. The United Steelworkers union, which represents the former employees, had argued that the federal Pension Benefit Guaranty Corp. was obligated to pay “shutdown pensions” to workers because they were part of the labor contract signed with RTI. The union contended that workers who did not have enough service time to qualify for other pension benefits had a contractual expectation that they would receive the shutdown benefits if the company closed. The union is reviewing the ruling before deciding whether to appeal further, union lawyer David Jury said. The PBGC, the government agency that insures U.S. workers’ pensions, had opposed paying the “shutdown pensions,” saying it was not required to provide benefits since the company never paid premiums to insure the pensions would be paid in the event it closed. The pension agency terminated RTI’s underfunded pension plans two months before the shutdown. The shutdown payments at issue would cost the government $96 million, the agency estimates. RTI filed for Chapter 11 bankruptcy reorganization and closed in August 2002. It operated Ohio plants in Canton, Massillon and Lorain, along with others in Chicago; Gary, Ind.; Lackawanna, N.Y.; and Beaver Falls and Johnstown, Pa. Copyright 2004 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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