PBGC Pension Benefit Guaranty Corporation 

mrmINMarr*~~~ 1200 K Street, N.W., Washington, D.C. 20005-4026 

January 21, 2003 

Re: Appeal '1 

Pan American World Airways, Inc. ("Pan Am") 

Cooperative Retirement Income Pension Plan ["CRIP" ) 

Dear [-I 

We are responding to I appeal of PBGC's 

December 22, 1998 determination of his benefit, remailed with an 

Appeals brochure on February 5, 1999. Based on having 

$0 average earnings, PBGC determined benefit was 

$378.00 per month if paid as a Straight Life Annuity starting 

June 1, 2003. Effective April 1, 1999, PBGC started paying him 

$242.61 per month as a Joint and 50% Survivor ~nnuity.' Effective 

January 1, 2002, PBGC started paying you a $121.30 per month 

Straight Life Annuity survivor benefit. 

As explained below, we recalculated your late husband's 

average pension earnings, slightly increased his service, applied 

a later benefit formula, and corrected an actuarial factor. 

Therefore, we are applying prior Appeals Board decisions to 

increase your husband's benefit to $467.17 per month and your 

benefit to $233.59 ($467.17 x 50%) per month. However, we are not 

changing his retirement date. 

YIn his March 10, 1999 letter, asked PBGC for "fair 

and equitable treatment." We explain 1 benefit below. 

He also asked that his benefit be started effective June 1, 1993. 

stating he did not know how to apply for a benefit until 

December 22, 1998. See page 5. 

ADDealS Board Decisions Relevant to Your A~~eal 

In prior decisions, the Appeals Board has: 

. found CRIP's definition of Compensation includes overtime and 

bonuses for participants in Pan Am's Management Workforce; and 

. decided PBGC may pay CRIP's subsidized Early Retirement 

Benefit only if as oE that date he had been employed by Pan Am 

within 10 years of his Normal Retirement Date. 

PBGC started paying your late husband $242.61 per month on 

November 1, 1999 when they also issued him a second check for 

$1.729.80 ($242.61 x 7 months + $31.53 interest). 
Data Relevant to Your Husband's ADD^^ 

PBGC's files contain the following data relevant to your 

husband's appeal and his Pan Am employment: 

(1) I Your husband's date of birth: 

(2) 1 Your date of birth: 

(5) 1 CRIP's termination date: 

(3) 

(4) 

-- 

Your husband's hire date: 

Date your husband resigned: 

(8) 1 Your husband's age on 4/01/1999, in years 

and completed months: 

(6) 

(7) 

Your age on 4/01/1999 in years and completed 

months : 

Date your husband signed his retirement 

application: 

Effective date on which your husband started 

receiving a CRIP benefit: 

(10) 1 Date your husband died: 

(11) I Your husband's Normal Retirement Date: 

10 60 months years 11 

62 years 11 

9 months 

Years of Benefit Service 

The full elapsed time from your husband's June 1, 1965 hire 

date through March 15, 1981 is 15-10/12 years, using CRIP's 

favorable rounding. Also Pan Am's records show no absences for 

your husband between those two dates. Therefore, we are increasing 

your husband's benefit service from 15-9/12 Years to 15-10/12 

years. 

Your Husband's Benefit 

As explained below your husband's CRIP benefit was $467.17 per 

month instead of the $242.61 PBGC paid. Your husband's Normal 

Retirement Benefit is the largest of his: 

Alternative I: Monthly Basic Benefit, 

Alternative 11: Monthly Minimum Benefit, or 

Alternative 111: Monthly Updated Benefit 
1. Your Husband's Pension Earnings 

We reproduced your husband's 1974-1976 and 1980 Annualized 

Compensation using CRIP's contribution formulas, contribution data, 

and Pan Am's payroll records. See column (3) below. We also 

calculated his annualized salary from Pan Am's salary records. See 

Column (2). Detailed calculations are shown in Enclosure 1. 

Therefore, we are applying prior Appeals Board decisions to change 

I Average Annualized Compensation to $33,237.74. 

Salary I 

Annualized Compensation We Calculated 

records 

131 

Pan Am 

Annualized 

111977 1 $25,886.00 I ~ot Available 1 $25,886.00 1 

1978 $29,456.22 Not Available $29,456.22 

1979 1 $33,259.54 1 Not Available 1 $33,259.54 

Based on Pan Am payroll 

and pension contribution 

111981 1 $39,644.16 1 ~ot Available 1 $39,644.16 1 

Annualized 

Compensation 

1977-1981 Average Annualized Compensation: 1 $33,237.74 

II 

Your Husband's Compensation 

1977-1981 Total Annualized Compensation: 

We also estimated your husband's Compensation. See Enclosure 

1. We estimated your husband's 1981 (un-annualized) Compensation 

as $12,333.74 shown in his 1981 Pan Am payroll tapes. The 

$12,333.74 amount is larger than $8,259.20 we calculated from his 

salary records. We estimated his 1974-1980 Compensation as his 

Annualized Compensation in Column (4) above. We also estimated his 

pre-1974 Compensation from his 1974 Annualized Compensation using 

National Average Wages. See Enclosure 4. Based on our estimates, 

your husband's benefit is largest under a formula which uses only 

his Annualized Compensation and does not use his Compensation. See 

sections 2 and 5 below and Enclosure 4. 

$166,188.68 

2. Alternative I: Monthly Basic Benefit (also called the "Career 

Average Formula" for the Management Workforce) 

Your husband's Monthly Basic Benefit is determined by adding: 
1) For each year or fraction of a year before 1979, 1% 

of' his Compensation up to $3,000, plus 2% of his 

Compensation over $3,000. 

2) For each year or fraction of a year beginning in 

1979, 1.25% of his Compensation up to $4,000 plus 

2% of his Compensation over $4,000. 

Because the records PBGC obtained from Pan Am do not contain 

data on your husband's pension earnings, PBGC was not able to 

calculate his Monthly Basic Benefit. The Appeals Board has 

verified it is unlikely that exact earnings data would improve the 

CRIP benefit of participants in his situation. Enclosure 4 shows 

we estimated your husband's $511.07 Monthly Basic Benefit using our 

estimates of his Compensation. 

3. Alternative 11: Monthly Minimum Benefit 

The Monthly Minimum Benefit is calculated by multiplying your 

husband's 15-10/12 Years of Benefit Service by the applicable 

benefit accrual rate for his job classification. Your husband met 

the requirements for using the larger $24.00 rate for all his Years 

of Benefit Service. See Enclosure 6. Therefore, his Monthly 

Minimum Benefit is $380.00 (15-10/12 years x $24.00), if paid as a 

Straight Life Annuity starting at his age 65. 

4. Alternative 111: Monthly Updated Benefit 

The Monthly Updated Benefit depends on Average Annualized 

Compensation (AAC) for the four 5-year periods ending on December 

31 of 1978, 1979, 1980, and 1981.' 71 benefit is largest 

using his 1977-1981 AAC. See Enclosure 5 which shows the pre-1976 

earnings needed need to increase the Monthly Updated Benefit. 

Updated Benefit Calculation Using 1977-1981 AAC 

Your husband's Monthly Updated Benefit based on his 1977-1981 

AAC is calculated by multiplying his $33,237.74 AAC by his 15-10/12 

Years of Benefit Service, then multiplied by 1.67%. Thus, his 

accrued Monthly Updated Benefit is $8,788.61 ($33,237.74 x (15- 

10/12 years) x .01671 per year, or $732.38 ($8,788.61 s 12 months) 

per month, if paid as a Straight Life Annuity starting at his age 

65. 

CRIP has an earlier version of the Monthly Updated Benefit 

which produces a smal2er benefit. The earlier version uses only a 

1.5% accrual rate instead of 1.67% and is further reduced based on 

a Social Security benefit. See Enclosure 6 page A-3. 

CRIP requires using a 1977-1981 AAC for Members like your 

husband who terminated employment in 1981 and retired in a later 

year. See Enclosure 6 page 6, CRIP 0525 
5. Your Husband's Normal Retirement Benefit 

Your husband's Normal Retirement Benefit is $732.38 per month 

under the Monthly Updated Benefit. The $732.38 is larger than the 

estimated $511.07 Monthly Basic Benefit and the $380.00 Monthly 

Minimum Benefit. 

6. Reduction for Your Husband Starting His Benefit Early 

To qualify for the subsidized Early Retirement Benefit, CRIP 

requires working for Pan Am within 10 years of Normal Retirement 

Date, age 65 for your husband. This CRIP requirement applies 

regardless of whether his employment ended voluntarily or 

involuntarily. Because he had not reached age 55 when his Pan Am 

employment ended on March 15, 1981, PBGC is unable to pay him 

CRIP's subsidized Early Retirement Benefit. See Enclosures 2 and 

3. 

Under CRIP's Vested Separation Benefit, your husband's benefit 

must be reduced for starting early using the factors in CRIP's 

45.2% Table. The applicable factor for a participant such as your 

husband who began receiving benefits at age 60 years 10 months is 

0.6920. See Enclosure 3. 

7. Reduction for Joint and 50% Survivor ("J650%SM) Annuity Fom 

Your husband's benefit is a J&50%S annuity. Based on your 

husband's age and your age when he started receiving his benefit, 

CRIP's applicable actuarial factor is 0.9218, slightly lower than 

the 0.9275 factor PBGC used. Therefore, his benefit should have 

been $467.17 ($732.38 x 0.6920 x 0.9218) per month. 

8. Your 50% Survivor Annuity 

Your survivor's benefit under your husband's J&50%S annuity is 

$233.59 ($467.17 x 50%). 

Alternate Retirement Date 

asked to be allowed to make his retirement 

retroactive to 1993. However, PBGC maintained Pan Am's former 

pension office after Pan Am's 1991 bankruptcy through the end of 

1992, when the office moved nearby. Mail and telephone calls were 

forwarded to the new pension office beyond the June 1993 date which 

your husband asked for a retroactive retirement date. 

PBGC's policy does not allow making a retirement date 

retroactive in circumstances such as these. Therefore, your 

husband did not present a basis for changing his retirement date. 

Please note, if your husband had started his benefit in June 

1993, his benefit would have been reduced using a .452 factor 

instead of .692. Therefore, your husband's and your benefits would 
be approximately 65% (.452 + .692) of the benefit decided in this 

letter. Thus, PBGC is paying approximately the same value even 

though your benefits started in 1999 instead of 1993. 

PBGC will always - even after an appeal is closed - consider 

any new. svecific evidence you present showing that you or your 

husband may be entitled to a different benefit. Please send any 

such information to: 

PBGC Authorized Plan Representative 

1175 Peachtree Street, N.E. 

100 Colony Square, Suite 500 

Atlanta, GA 30361 

You may also contact PBGC's Authorized Plan Representative at 1- 

800-400-7242 extension 2000. 

Decision 

Applying prior Appeals Board decisions to the facts in your 

case, we are increasing your husband's benefit to $467.17 per month 

and your benefit to $233.59 ($467.17 x SO%), retroactive to 

April 1. 1999. PBGC's Authorized Plan Representative will contact 

you regarding paying your and your husband's past underpayments. 

This letter concludes your administrative remedies with 

respect to PBGC's December 22, 1998 determination. You may, if you 

wish, seek court review of PBGC's determination with respect to the 

issues your husband raised. We appreciate your and your late 

husband's patience during this careful review of his appeal. 

Sincerely, 

William D. Ellis 

Appeals Board Member 

Enclosures: 

1) Pension Earnings Constructed from Pan Am Data 

2) Explanation of Certain Appeals Board Rulings Involving 

the Pan Am "CRIP Plan" (7 pages) 

3) Summary of CRIP's provisions (2 pages) 

4) Worksheet showing our estimate of your husband's Monthly 

Basic ("Career Average") Benefit 

5) Worksheet showing our calculation of your husband's 

Monthly Updated Benefit based on our estimations of his 

Compensation 

6) 1980 CRIP document, Appendix A-1 (14 pages)