AK Steel Applauds Enactment of Highway and Transportation Funding Act
08/11/2014 - AK Steel is applauding the enactment of the Highway and Transportation Funding Act, legislation that is vital to maintaining and improving America's infrastructure — much of which is made with steel.
In addition to bolstering the Highway Trust Fund, the legislation contains an interest rate stabilization provision for companies that sponsor defined benefit employee pension plans, such as AK Steel.
The pension stabilization provision is meaningful to AK Steel and its retirees in several ways. For the company, the provision ensures that its pension funding obligations will not dramatically increase when interest rates are low, which can free up capital for the good of the business. For its retirees, the provision offers a sense of security, as it continues to require companies to meet certain funding requirements even when interest rates rise.
"We appreciate the important work done by Congress and the President to pass the Highway and Transportation Funding Act, legislation that is good for our country and for AK Steel," said James L. Wainscott, chairman, president and CEO of AK Steel. "The legislation will allow AK Steel to direct capital into the business without sacrificing our ability to continue to meet our pension funding obligations."
Steelmaking is a capital-intensive business, and low interest rates have significantly increased AK Steel's pension obligation in recent years. As a result of the stabilization provision, and based on current actuarial assumptions, the company expects its pension contributions to decrease by approximately US$65 million in 2015, thus reducing its required pension contributions for 2015 from a previously estimated US$100 million to a current estimate of approximately US$35 million. For 2016, AK Steel currently estimates its pension contributions to be about US$15 million, down from a previous estimate of approximately US$50 million, for a decrease of US$35 million.
AK Steel, including its predecessor company, Armco, has sponsored defined benefit employee pension plans for more than 60 years. In that time, the company has never missed a contribution to its pension trust fund nor a pension payment to generations of retirees and their survivors. From 2005 to date, AK Steel has contributed approximately US$1.9 billion in cash contributions to its pension trust fund. As of 30 June 2014, the company estimated that its pension plan is approximately 87% funded based on current actuarial assumptions.
The pension stabilization provision is meaningful to AK Steel and its retirees in several ways. For the company, the provision ensures that its pension funding obligations will not dramatically increase when interest rates are low, which can free up capital for the good of the business. For its retirees, the provision offers a sense of security, as it continues to require companies to meet certain funding requirements even when interest rates rise.
"We appreciate the important work done by Congress and the President to pass the Highway and Transportation Funding Act, legislation that is good for our country and for AK Steel," said James L. Wainscott, chairman, president and CEO of AK Steel. "The legislation will allow AK Steel to direct capital into the business without sacrificing our ability to continue to meet our pension funding obligations."
Steelmaking is a capital-intensive business, and low interest rates have significantly increased AK Steel's pension obligation in recent years. As a result of the stabilization provision, and based on current actuarial assumptions, the company expects its pension contributions to decrease by approximately US$65 million in 2015, thus reducing its required pension contributions for 2015 from a previously estimated US$100 million to a current estimate of approximately US$35 million. For 2016, AK Steel currently estimates its pension contributions to be about US$15 million, down from a previous estimate of approximately US$50 million, for a decrease of US$35 million.
AK Steel, including its predecessor company, Armco, has sponsored defined benefit employee pension plans for more than 60 years. In that time, the company has never missed a contribution to its pension trust fund nor a pension payment to generations of retirees and their survivors. From 2005 to date, AK Steel has contributed approximately US$1.9 billion in cash contributions to its pension trust fund. As of 30 June 2014, the company estimated that its pension plan is approximately 87% funded based on current actuarial assumptions.
