updated 7/12/2005 8:47:48 AM ET 2005-07-12T12:47:48

Enron employees whose retirement plans vanished when the company imploded may be getting some compensation after all, thanks to a settlement announced Monday by the government.

The Labor Department, which sued Enron in 2003 on behalf of the company's employees, said about $356 million will be set aside out of proceeds from the sale of Enron's assets to cover some of the lost retirement and pension plan benefits.

"This agreement makes possible a significant recovery for Enron retirees and their families," Labor Secretary Elaine Chao said.

The settlement resolves the lawsuit, which alleged Enron mismanaged its retirement and pension plans by relying on its stocks to support them and did nothing to protect workers from losses, according to a Labor Department statement.

"We are extremely pleased to have resolved another issue in the bankruptcy proceedings and removed a significant hurdle in the termination of Enron's pension plans," said Stephen Cooper, Enron's interim CEO and chief restructuring officer.

The Labor Department said the agreement is subject to approval from the New York Bankruptcy and Texas district courts, and does not settle separate Labor Department claims against Enron founder Kenneth Lay and former CEO Jeffrey Skilling.

Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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