UPDATE 1-U.S. pension agency starts Lehman court action

NEW YORK, Dec 12 (Reuters) - The Pension Benefit Guaranty Corp (PBGC) said on Friday it has gone to court to protect the benefits of more than 26,500 workers and retirees of Lehman Brothers Holdings Inc (LEHMQ.PK) and its units.

The agency filed papers to seek approval from U.S. District Court in Manhattan to end Lehman's pension plan in order to ensure funds can be raised for the plan after Lehman asset sales scheduled for later this month, it said.

Lehman filed for Chapter 11 bankruptcy protection in September.

The PBGC, a government agency that insures workers' pensions, said that Lehman's pension plan is 95 percent funded, with $898.2 million in assets to cover $940.8 million in benefit liabilities.

If the pension plan ends, the agency said it expects to be responsible for $17.9 million of the $42.6 million shortfall.

The PBGC's move came ahead of a Dec. 22 bankruptcy court hearing on the sale of Lehman units that make up the company's investment management business. It ensures that the units being sold remain liable for the pension plan's unfunded benefit liabilities, the PBGC said. (Reporting by Caroline Humer; editing by Jeffrey Benkoe)