Copyright 2004 The Denver Post
All Rights Reserved
The Denver Post
September 9, 2004 Thursday
FINAL EDITION
SECTION: BUSINESS; Pg. C-02

LENGTH: 446 words

HEADLINE: United chooses fiduciary for pensions The Labor Department sanctions the selection of a third party to act on behalf of employees and retirees.

BYLINE: Kelly Yamanouchi Denver Post Staff Writer

BODY:


As United Airlines considers terminating its pension plans, it has selected Washington, D.C.-based Independent Fiduciary Services Inc. as fiduciary for the plans.

The appointment, which has already been agreed to by the U.S. Department of Labor, is intended to protect the interests of employees and retirees.

The Labor Department and United agreed that United would appoint a fiduciary after all three members of its Pension and Welfare Plan Administration Committee resigned in June, citing a possible conflict of interest as they considered restructuring the plans, then United transferred fiduciary responsibilities to itself.

Secretary of Labor Elaine Chao said in a statement last month that United's decision to stop funding its pension plans made clear the need to appoint an independent fiduciary to represent the interests of workers and retirees. United and the Department of Labor came to an agreement that United could make the selection.

The appointment of an independent fiduciary "takes the friction out between labor and management," said Helane Becker, a transportation analyst at The Benchmark Co. Becker said she thinks the plans will be terminated. "I think it's the only way to come out of Chapter 11," she said.

United spokeswoman Jean Medina said the airline has already indicated that the pension plans would probably be terminated and is "in the process of actively talking to all of our stakeholders to review all options." She said she would not speculate on what those other options might be.

United will pay IFS $175,000 for the first three months of work and $50,000 a month afterward. IFS will be fiduciary for United's defined benefit pension plans for pilots; flight attendants; mechanics and ramp, stores, food service and related employees; and management, administrative and public contact employees.

IFS started off as a unit of The Bear Stearns Cos. in 1986. IFS's principals bought the business in 1996, and it is now an independent investment advisory firm.

Its clients have included the Oregon State Treasury, the Dairy Industry-Union Pension Fund and the Mason Tenders District Council Pension Fund.

Samuel Halpern, IFS executive vice president, litigated fiduciary responsibility cases under the federal pension law at the U.S. Department of Labor. He also was a partner in a Washington, D.C., labor law firm.

"Our duty ultimately runs to the participants and beneficiaries of the pension plans," Halpern said.

United filed a motion for approval of the fiduciary appointment Friday. It will be considered at a bankruptcy court hearing Sept. 17 in Chicago.

Staff writer Kelly Yamanouchi can be reached at 303-820-1488 or kyamanouchi@denverpost.com.