By Matt Daily

HOUSTON (Reuters) - Enron Corp. will pay $321 million from the proceeds of its sale of its pipeline arm to fund pension plans for thousands of former employees, a government pension agency said on Monday.

The $321 million, from the $2.45 billion sale of Enron's U.S. pipelines operations, will fully fund four defined-benefit pension plans, a PBGC spokesman said. Those do not include the 401-K or stock option plans that made up the bulk of retirement packages for employees of the bankrupt energy company.

That settlement "represents a significant step toward preserving the benefits of participants in Enron's defined-benefit pension plans," Bradley Belt, executive director of the federal Public Benefit Guaranty Corp. (PBGC) said in a statement.

The PBGC had sued Enron in federal court in Houston in June to take over operation of four pension funds covering 17,000 Enron employees.

Thousands of employees lost their retirement plans when Enron collapsed into bankruptcy in December 2001 after investors and lenders learned it had hidden billions of dollars in debt using deals kept off its balance sheets.

Enron is selling its U.S. pipelines operations, CrossCountry Energy LLC, to Southern Union Co. and General Electric Co. A federal bankruptcy court approved the deal on Friday after the PBGC dropped objections because Enron agreed to fund the escrow account.

The pensions that will receive the funds are the Enron Corp. Cash Balance Plan, Garden State Paper Pension Plan, Enron Financial Services Pension Plan and San Juan Gas Company Pension Plan.

Under a settlement announced in May, Enron's human resources committee and several outside directors agreed pay $85 million from fiduciary insurance policies to former Enron employees who lost billions of dollars in the shares and stock options.