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PBGC Pension Benefit Guaranty Corporation 

Protecting AmericII's Pensions 1200 K Street, N.W., Washington, D.C. 20005-4026 

June 6, 2008 

Re: (formerly Appeal 2002-1012); The Graduate Hospital 

Pension Plan (the "Graduate Plan"); Case #: 187421 

Dear 

Weare responding to the appeal you filed on behalf of concerning 

PBGC's June 24, 2002 detennination of his benefit under the Graduate Plan. As explained below, we 

are denying your appeal. 

PBGCs Benefit Determination and Your Appeals 

PBGC detennined that is entitled to a benefit of $599.69 per month, if paid 

as a lifetime annuity beginning June 1,2008, the first of the month following his 65th birthday, or to 

a lower amount if paid in a different form. appealed on July 26, 2002, stating that he 

began work as Director of The Graduate Hospital Foundation on April 1 , 1979, and became a full-time 

employee of The Graduate Hospital on January 1, 1984. He said that his Graduate Plan benefit should 

be based on a service start date of April 1, 1979, rather than the January 1, 1984 date PBGC used. We 

denied his appeal in a decision dated May 9, 2003, 

You submitted additional information on behalf by letters dated May 23, 

2005, September 8, 2005, December 6, 2006 and April 24, 2008. You had requested that we review 

this information and reopen his appeal. The Board voted to do so on February 1, 2007. 

You also asked whether the Potential Private Pension Benefit Information Notice for 

you submitted with your April 24, 2008 letter has any bearing on his appeal. These are 

informational notices the Social Security Administration sends to individuals who apply for Social 

Security benefits to alert them of potential entitlement to a benefit from a former employer. A Notice 

generally provides an estimate of the benefit amount and generally assumes employment until nonnal 

retirement age. Notice lists Year Reported as 1998, which coincides with Graduate 

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Plan's termination date. The boxes for Type of Annuity and Estimated Amount are blank. All we can 

infer from the Notice is that did at some point participate in the Graduate Plan. 

Benefit Calculation 

As we explained in our 2003 decision, in early 1991, Graduate Hospital initiated a "standard" 

termination afthe Graduate Plan under section 4041 (b) of the Employee Retirement Income Security 

Act, with a proposed termination date of July 14,1991. A standard termination can occur only if, 

among other things, the plan has sufficient assets to provide all benefits accrued as of the proposed 

termination date. As part of the standard termination process, the former Plan Administrator was 

required to calculate each participant's accrued benefit as of July 14, 1991 based on each participant's 

specific (i.e., not estimated) service, compensation, etc. The July 14, 1991 frozen accrued benefit 

calculated for is $599.69 per month. 

Due to a subsequent rise in annuity purchase prices, Plan assets were not sufficient to provide 

all benefits and the standard termination did not occur. Although the Graduate Plan continued as an 

ongoing plan until it eventually terminated on November 10, 1998, the Plan was administered during 

that period as if (1) all benefit accruals were frozen as of July 14, 1991, and (2) all then-active 

participants were vested in their frozen accrued benefit. 1 Further, new employees could not participate 

in the Plan. PBGC's auditors accepted the frozen accrued benefit amounts previously calculated 

during the standard termination process. 

Under section 6.1 ofthe 1989 Plan document, a participant's accrued benefit is equal to 1.5% 

of Applicable Compensation in effect as ofthe first day of each Plan Year (July 1 st through June 30th) 

for each year of participation during which the employee had at least 1,000 hours or service. As we 

noted in our 2003 decision, the Plan did not retain the service and compensation data underlying the 

1991 calculations. The earnings data we obtained from the Social Security Administration (copy 

enclosed) are on a calendar year basis and may include earnings from sources excluded from 

Applicable Compensation under Plan section 2.7 (e.g., bonuses and overtime) and exclude earnings 

that are included (e.g., earnings excluded from basic compensation under a salary reduction plan). 

Nevertheless, we used these earnings as a basis for attempting to replicate your 1991 accrued benefit 

calculation. We concluded that the former Plan Administrator, the official most familiar with Plan 

terms and practices, did not include the entire 1979 - 1990 period in the calculation. 

Covered Emplovment 

To analyze initial appeal, we obtained, with his pennission, his earnings 

history for the years 1978 through 1985 from the Social Security Administration (SSA). Our 2003 

decision said that (1) the SSA data show that . worked for the Philadelphia Health Care 

1 PBGC later determined that the July 14, 1991 benefit freeze was invalid. This did not affect 

because his employment terminated before that date. 

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Trust (the "PHCT") from 1978 through 1983, and for Graduate Hospital in 1984 and 1985, and (2) 

there is no evidence in the files PBGe's auditors obtained from the fonner Plan Administrator 

indicating that the PHCT was an entity whose employees were covered under the Graduate Plan. 

According to your May 23, 2005 letter and the copy of a 2005 Pennsylvania Appeals Court 

decision you attached, PHCT was originally incorporated as a Pennsylvania non-profit corporation on 

December 10, 1975, under the name "The Graduate Hospital Foundation." You explained that, in 

August of 1998, long after ended his employment with Graduate Hospital, the 

Foundation changed its name to the PHCT but apparently kept the same Employer Identification 

Number. You believe there was a substantial "affiliationll between the Foundation and Graduate 

Hospital because "the Foundation was the original mechanism through which the Graduate Hospital 

of the University of Pennsylvania became the non-profit entity known as the Graduate Hospital." You 

suggested that the name change from the Foundation to PHCT may explain why PBGC concluded that 

service with PHCT was not covered under the Graduate Plan. 

During our review of original appeal, which cited his service from. 

1979 through 1 1983 with the Graduate Hospital Foundation, we researched the Plan 

documents and available records and found no evidence that the Graduate Plan covered Foundation 

employees. Similarly, once we received his Social Security earnings identifYingPHCT as his employer 

during that period, we researched PHCT and found no evidence that the Plan covered PHCT 

employees at that time. 

Further, the October 25, 2005 response from PBGC's Disclosure Officer to your Freedom of 

Information Act and Privacy Act request noted that they thoroughly searched the Plan file and did not 

locate (1) any documents that referred to the Graduate Hospital Foundation or Foundation employees, 

or that made any reference to coverage of Foundation employees, or (2) any trustee minutes related 

to the status of Foundation employees under the Plan. The Disclosure Officer also enclosed with his 

letter copies of the Graduate Plan document and entire PBGC benefit file. 

The January 1, 1978 Plan document was the document in effect from 1979 through 1983, when 

said he began working for the Graduate Hospital Foundation. According to Plan 

section 1.10, "Employer" means tiThe Graduate HospitaJ, a Pennsylvania corporation, and shall 

include the predecessor thereto, the Graduate Hospital division of the University ofPennsylvania. 1t 

Plan section 1.9 defines UEmployeen as a "person employed by The Graduate Hospital, except for 

employees covered by another retirement benefit program maintained by Employer or whose 

employment is incidental to an education program maintained by Employer. 11 

The definitions of Employer and Employee under the 1978 Plan refer only to The Graduate 

Hospital. Even if the Graduate Hospital Foundation were an "affiliate" of the Graduate Hospital 

during the 1978 - 1983 period, the 1978 Plan does not cover employees of affiliates, subsidiaries or 

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other entities. 2 Further, ; appears to have been "covered by another retirement benefit 

program maintained by Employer" at least from 1980 through 1986, as evidenced by the Summary of 

Premiums Remitted For from TIAA-CREF he submitted with his appeal. 

Decision 

For the reasons explained above, the Appeals Board found no basis for changing PBGC's 

detennination that is entitled to $599.69 per month, if paid as a lifetime annuity 

beginning June 1, 2008. This decision is PBGCs final action on this matter. If he wishes, 

may ask an appropriate federal district court to review this decision. 

If you or need other infonnation from PBGC, please call our Customer Contact 

Center at 1-800-400-7242. 

Sincerely, 

Linda M. Mizzi 

Member, Appeals Board 

Enclosure 

cc: 

2 We note that subsequent amendments to the Graduate Plan changed the definition of Employer. 

Section 1.23 of the Plan document that became effective July 1, 1984 defines "Employer" as --

The Graduate Hospital, a Pennsylvania non-profit corporation, and any successor 

or related entity thereto which adopts this Plan. The term "Employerll also includes 

any other entity which, with the consent of the Board of Directors, adopts this Plan. 

Section 2.11 of the Plan document that became effective July 1, 1989 defines "Company or 

Employer" as --

The Graduate Hospital and any successor company, subsidiary or affiliated 

company which with the consent ofthe Board of Directors of the Company adopts 

this Plan and Trust. 

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