U.S. pension insurer pays retirees after Madoff loss

WASHINGTON (Reuters) - The U.S. agency that insures corporate pensions took responsibility for about $2 million in pensions owed to former employees of East River Management Corp, a building service provider that lost all its assets in the Bernard Madoff scandal, the agency said on Tuesday.

The Pension Benefit Guaranty Corporation (PBGC) said it stepped in after New York-based East River Management's retirement plan was unable to pay benefits owed to retired workers.

The PBGC started paying benefits to East River Management retirees on an emergency basis after learning of the retirement plan's problems in December.

The agency estimated it will assume about $2 million in benefits liabilities owed to 88 former employees as a result of the plan's termination. Assumption of the plan's unfunded liabilities will have no material effect on the PBGC, the agency said.

In January, the PBGC became a creditor in liquidation proceedings against Madoff's investment firm.

Madoff is accused of a $50 billion investment fraud scheme. The former Wall Street financier is expected to plead guilty on Thursday to criminal charges, Madoff's lawyer told a court hearing on Tuesday.

Retirees will continue to receive their monthly benefit checks without interruption, and other participants will receive their pensions when they are eligible to retire, the PBGC said.

Under federal pension law, the maximum guaranteed pension at age 65 for participants in plans that terminated in 2008 is $51,750 per year. The PBGC is financed mostly by insurance premiums paid by companies that sponsor pension plans and by its investment returns.

(Reporting by Julie Vorman; editing by Matthew Lewis)