CHICAGO -- Montgomery Ward & Co. is terminating its pension plan and using some of the surplus money to help it emerge from bankruptcy.

The move affects 30,000 Ward retirees and 22,000 current employees, Ward said.

Ward doesn't yet know how much money it will recapture from ending the plan, said Ward spokesman Chuck Knittle.

But given the size of Ward and the number of employees in the pension plan, it is probably millions of dollars and possibly, tens of millions, pension experts say.

The retirees are being offered the option of receiving an annuity from an insurance company equal to the value of the pension they were receiving or a lump-sum payout.

"No one is at risk," said Chuck Knittle, Ward spokesman.

But not everyone is happy with the strategy. William Farr, a Ward retiree who worked in the company's headquarters for 30 years, said he chose the lump-sum payment "because I no longer trust Montgomery Ward to do what is right. I'm quite disillusioned with them."

However, Chicago bankruptcy attorney Robert Fishman said any tinkering with pension plans is closely supervised by a government agency, the Pension Benefit Guaranty Corp., and bankruptcy judges.

In the past, it was too easy for bankrupt companies to throw retirees to the wolves to satisfy hungry creditors, Fishman said. But bankruptcy law was changed to help ensure that doesn't happen anymore, he said.

It makes sense that Ward would have an over-funded pension plan.

Companies typically invest contributions in such things as stocks, and the run-up in the stock market during the past several years has boosted the value of these investments beyond the conservative projection of actuaries, Fishman said.

Some 25 percent of the excess funding in the old pension plan will be used to fund a new plan for current employees, Knittle said.

A U.S. Bankruptcy Court judge in Delaware approved the pension plan termination last month.

Ward can use the money to make up for a potential shortfall in the amount it will be receiving for the sale of its headquarters property along the Chicago River.

The company had a $110 million contract to sell the property to a Virginia development firm. But that deal fell through.

Now Ward has a letter of intent to sell the property for $62 million to Centrum Properties Inc., a Chicago real estate development firm.

The new deal does not include Ward's headquarters tower and parking facility, which also were not included in the first deal.

Pub Date: 3/18/99