The federal Pension Benefit Guaranty Corp. said yesterday that it will take over bankrupt Bethlehem Steel Corp.'s pension plan, which is underfunded by $4.3 billion, and terminate it tomorrow - a move the steelmaker said would threaten its efforts to restructure.

In a statement released after business hours yesterday, the PBGC said it was "moving to protect the basic pension benefits of Bethlehem's workers and retirees."

The plan covers the steelmaker's current 67,000 retirees, 15,000 former employees eligible for payment upon retirement, and nearly 13,000 active workers, the PBGC said. About 20,000 retirees and surviving spouses are in the Baltimore area and another 3,300 work at Bethlehem's Sparrows Point plant.

Jeffrey Speicher, a PBGC spokesman, said that, after Wednesday, people who work at Bethlehem no longer have a future pension, though they have the right to pension they've already earned.

Under federal pension law, the maximum annual pension guaranteed is currently $42,954.60 for those in plans terminated in 2002.

Robert S. "Steve" Miller Jr., Bethlehem's chairman and chief executive, said the company expected the termination, but took issue with its timing.

"We are very disappointed that the PBGC is taking this action when Bethlehem has clearly not missed any scheduled contributions to the fund or payments from it to eligible recipients. ... This premature termination deals a serious blow to the potential recovery by the creditors" of the company, he said.

Miller said Bethlehem will meet with PBGC officials in an attempt to change the timing of the takeover "in order to complete the restructuring of our company in a manner that will treat our employees and creditors fairly."

The PBGC will be liable for $3.7 billion of Bethlehem's obligation.

The PBGC said yesterday that the takeover ranks as the largest in its 28-year history, both in terms of the number of participants and the amount of underfunding. The PBGC takes over pension plans with assets substantially below its obligations and uses the employer's assets to help make payments.

Bethlehem is in the midst of a 60-day exclusive exploration period for a possible asset sale to International Steel Group Inc. that would create the country's largest integrated steelmaker. Those assets include Bethlehem's two biggest plants, Sparrows Point and Burns Harbor, Ind. The 60-day period ends Jan. 6.

Bethlehem, which filed for Chapter 11 bankruptcy protection in October 2001, has blamed its financial losses on so-called "legacy costs" - such as retiree health care and pensions that have built up over the years. For the first three quarters of this year, Bethlehem has posted a loss of $300 million.

Bette Kovach, a Bethlehem spokeswoman, said yesterday that the company would have "liked a period of time where we could have notified employees of the termination date so they could have the opportunity to evaluate whether or not they would elect to retire."

"The pension takeover affects everybody who is vested in the pension program," Kovach said. The people who are most vulnerable are people who have worked between 25 and 29 years of service," who cannot voluntarily retire if the plan is terminated, she said. Those employees will have to wait until age 62 to receive a pension payment provided by the PBGC, she said.

Bethlehem is also in the midst of negotiating a new labor contract with the United Steelworkers of America union, and the pension takeover complicates those negotiations as well, Kovach said. In his statement, Miller said the company had been in talks to "significantly reduce" the union work force as well as to eliminate salaried jobs.