1 3BGC 

Pension Benefit Guaranty Corporation 

proteeing pro ti^^.^ pensions 1200 K Street, N.W.. Washington, D.C. 20005-4026 

MAR 1 7 2005 

Re: case # 196603, Bethlehem Steel Corporation Pension Plan 

The Appeals Board has reviewed your appeal of PBGC's July 16,2004 determination of 

your benefit under the Bethlehem Plan. For the reasons discussed below, the Board changed 

PBGC's determination by finding that you are entitled to $77.18 per month as a Straight Life 

Annuity from January 1, 2003 (the first of the month following the Plan's termination date) 

through April 1, 2003 (the last month for which you received a Worker's Compensation 

payment), and to $397.18 per month thereafter. The Board also found that, if you are married 

at the time of your death, your then spouse will be eligible for a Surviving Spouse's Benefit 

provided you and she were married for at least the three years prior to your death. 

PBGC's Determination and Your Auueal 

PBGC's letter said that you are entitled to $397.18 per month in the form of a Straight 

Life Annuity, which is the same amount you are currently receiving and the same amount you 

received from the prior Plan Administrator. PBGC explained that the Plan also provided a 

separate Surviving Spouse's Benefit payable to eligible spouses of participants who died before 

age 65. Lastly, PBGC noted that your spouse will not receive this benefit because you are now 

older than 65. 

According to your July 26,2004 appeal, you are receiving a Total Permanent Disability 

pension because of a serious work-related accident in January, 1974, at the Jacksonville Steel 

plant. Your letter said that Bethlehem deducted $320 per month from your pension, which was 

the amount of your Worker's Compensation payment. You said your Worker's Compensation 

payments stopped when Bethlehem went bankrupt. You believe, therefore, that PBGC should 

add back the $320 per month, for a total monthly pension of $717.18. 
Permanent Incavacitv Pension Benefit 

The Bethlehem Plan terminated, effective December 18,2002, without sufficient assets 

to provide all benefits PBGC guarantees under Title IV of the Employee Retirement Income 

Security Act (ERISA). The files PBGC's auditors obtained from the former Plan Administrator 

show that you retired under the Permanent Incapacity Retirement provisions of the 1972 Steel 

Salaried Plan on January 31, 1975, at age 46.75 with 26.17 years of credited service. You 

elected to receive your benefit in the form of an unreduced monthly benefit for your lifetime with 

no benefits payable after your death (a Straight Life Annuity). 

Under Plan section 3.3, a participant's regular monthly benefit at each age is the highest 

of three amounts: the "percent pension," the "minimum pension" and the "total retirement 1 % % 

pension." Any total retirement 1 % % pension amount payable after age 65 must be reduced by 

50 % of the participant's unreduced Social Security old-age insurance benefit computed under 

specified Plan assumptions (Plan section 3.9(b)). If a retired participant also receives Worker's 

Compensation, section 3.1 1 requires that amounts payable under any of the three pension 

formulas be reduced by the Worker's Compensation payments. That reduction does not start 

until age 65, however, for a Permanent Incapacity retiree. Please see Enclosure 1 for a copy of 

the relevant Plan provisions. 

Information available to the Appeals Board shows that, at the time you retired, your 

regular benefit was highest under the total retirement 1 % % formula, which produced a benefit 

of $379.00 per month. Please see Enclosure 2 for a copy of the calculation sheet Bethlehem 

prepared for you when you retired. Your regular benefit amount computed under one or more 

of the benefit formulas increased slightly after you retired because of Plan amendments that 

became effective in 1975, 1978, 1980 and 1981. For your convenience, the chart below 

summarizes your regular monthly benefit under the different benefit formulas: 

I Reguln Monthly Pension Under 

Effective Each Benefit Formula 

Percent Minimum Total 
Your benefit continued'to be highest under the total retirement 1% % formula until 

age 65. At that point, the Plan required your total retirement 1 % % benefit amount to be reduced 

by 50% of the unreduced Social Security old-age insurance benefit. After applying the Plan's 

Social Security offset of $152.15, your benefit under the total retirement 1 % % formula after 

age 65 became $319.03 per month. Because the amount under the minimum formula was 

highest after age 65, the Plan began paying you $397.18 per month under the minimum formula 

effective April 1,1993, the fust ofthe month with your 65" birthday. Thus, the decrease in your 

monthly benefitfiom $471.18 to $397.18 at age 65 resulted solely fiom the operation of the 

Plan's benefit formulas. 

As noted on page 2 of this letter, pension benefits payable to a Permanent Incapacity 

retiree after age 65 must be reduced by any Worker's Compensation (WC) benefits to which he 

or she is entitled. The files show that you were receiving WC payments of $320 per month. Due 

to administrative error, however, Bethlehem did not reduce your pension benefit at age 65 to 

account for your WC payments. You continued receiving $397.18 per month after reaching 

age 65, instead of the $77.18 per month to which you were entitled (which equals your $397.18 

monthly Plan benefit minus your $320.00 monthly WC payment). 

You said in your appeal that your WC payments ended when Bethlehem went bankrupt. 

According to information obtained by the Appeals Board, your last WC payment was made 

April 1,2003. Because you are no longer receiving WC payments, the Board found that you are 

entitled to your full (unreduced) Plan benefit of $397.18 per month effective May 1,2003. 

Because of the administrative error by Bethlehem, you were overpaid $320 per month 

from April 1, 1993 through April 1, 2003. PBGC's regulations require that PBGC recover 

overpayments made under the Bethlehem Plan after December 18, 2002, the date the Plan 

terminated. PBGC does this by reducing future monthly payments until the overpayment, 

without interest, is repaid. 

Surviving Spouse's Benefit 

PBGC's July 16, 2004 letter also noted that the Plan provided a separate Surviving 

Spouse's Benefit (SSB) payable to eligible spouses of participants who died before age 65. In 

the case of a participant (1) who retired under the Permanent Incapacity provisions of the 1972 

Salaried Plan with 15 or more years of service and (2) whose age plus service total less than 80 

(yours total 72.92), the 1972 Plan provides that an SSB is payable to an eligible spouse only if 

the participant's death occurs after age 55 and before age 65. 
The Appeals Board found, however, that certain SSB provisions under the 1972 Plan 

were amended, effective July 3 1,1975, and made retroactive for participants like you who retired 

under the 1972 Plan after July 3 1, 1974. These amendments changed the requirement that the 

death of an otherwise eligible participant must occur between ages 55 and 65 for an SSB to be 

payable. In a situation like yours in which a participant marries after retiring,@ or her spouse 

is eligible for the SSB if they were married on the participant's date of death and had been 

married for at least the prior three years. 

If an eligible surviving spouse is less than age 60, the SSB until he or she reaches age 60 

is equal to the greater of 50% of the participant's basic monthly benefit or $127.50. When an 

eligible spouse is or reaches age 60, the Plan requires that the pre-age 60 monthly SSB amount 

be reduced, but not below $77.50, by 50% of the amount of the Social Security widow's or 

widower's benefit that could have become payable to the surviving spouse if he or she had been 

eligible and had applied for such a benefit. 

Decision 

Having applied the law, the provisions of the Plan and PBGC's regulations to the facts 

in this case, the Appeals Board found that you are entitled to $77.18 per month as a Straight Life 

Annuity fiom January 1, 2003 (the fust of the month following the Plan's termination date) 

through April 1,2003 (the last month for which you received a WC payment), and to $397.18 

per month thereafter. PBGC's Insurance Operations Department, the organization responsible 

for determining and paying benefits, will contact you directly concerning the total overpayment 

amount for the 4-month period fkom January through April of 2003. 

The Board also found that, if you are married at the time of your death, your then spouse 

will be eligible for a Surviving Spouse's Benefit provided you and she were married for at least 

the three years prior to your death. 

This is the Agency's final decision on this matter and you may, if you wish, seek court 

review. If you need other information from PBGC, please call our Customer Contact Center at 

1-800-400-7242. 

Sincerely, 

Linda M. Mizzi 

Member, Appeals Board 

Enclosures (2)