"v~ PBGC Pension Benefit Guaranty Corporation 

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

www.pbgc.gov 

Septerrner 15, 2006 

Re: I Case Number 195240 

LTV Steel Hourly Pension Plan (the "Hourly Plan") 

Dear 1 I: 

The Appeals Board has reviewed your December 5, 2005 appeal of 

PBGC ' s August 18, 20·05 determination of your benefit. As explained 

below, we are partially granting your appeal. 

Benefit Determinations and Your First Appeal 

PBGC determined your benefit is $453.37 1 per month if paid as 

a Straight Life Annuity starting 2019 (rounded age 62). 

You may start your benefit as early as 2017 with a 

reduction for beginning early. 

On September 26 , 2005, you questioned how PBGC calculated a 

$682.63 offset for LTV's Defined Contribution Plan (the "DCP"). 2 

In particular, you asked us to compare your offset calculation with 

PBGC's calculations for 3 other participants. You noted you and 

the other 3 have similar pension data, including service and 

pension earnings. The other 3 have Normal Retirement Benefits 

between $604.00 and $620.00 instead of $453.37. You stated the 

other 3 participants gave their permission for you to discuss their 

benefit calculations. 

1 $1,048.89 benefit under oldest plan + ($1,203.34 - $1048.89) 

x 40% guaranty of benefit increase + ($1,329.98 - $1,203.34) x 20% 

guaranty of benefit increase - $682.63 DCP offset 

2 The DCP was formerly the LTV Steel-USWA Pension plan, until 

the DCP merged into the Hourly Plan in 1999. Effective IVlarch 31 , 

2002, your DCP account balance was transferred to the LTV Steel 

Hourly Defined Contribution Pension Plan, a non-PBGC-trusteed plan. 

See page 4 and Enclosure 2 to this letter. 
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On November 10, 2005, PBGC responded by explaining how your 

DCP offset was calculated. Citing privacy concerns, PBGC did not 

compare your $453.37 benefit calculation with calculations of the 

other 3 participants you named. 

Your Second Appeal 

In your December 5, 2005 appeal, you questioned why PBGC"s 

$90,872.86 proj ected DCP balance is so high. You asked us to 

compare your DCP offset calculations for the other 3 participants 

you named and asked if PBGC used the same interest rates for all 

four of you. You enclosed copies of their PBGC benefit 

determination letters and Benefit Statements. 

Discussion 

We compared PBGC's DCP calculations for you and on the 3 other 

Benefit Statements you submitted. For privacy reasons, we will 

neither name those participants nor refer to any PBGC data for them 

except as shown on the Benefit Statements you already provided. 

Relevant Data 

Your LTV employment ended I I 2001. PBGC's records show 

you had the following DCP account balances: 

Date Account Balancei 

2001 i $32,498.70 ,... 

2001 I $31,939.62 ,... ! ! 1--' , 2001 $31,139.12 

I~ 2002 $31,214.48 

2002 $30,773.68 : 

.... 

2002 $30,066.64 

2002 $29,999.04 : 

! 2002 I $27,804.82 i 

2002 ~ $24,282.40 

2002 $24,673.04 

2002 $23,174.54 

DCP Elections before Plan Termination 

The Hourly Plan held assets in separate individual participant 

accounts - the defined contribution portion of their benefits. 

Also, by law, PBGC guarantees benefits only in defined benefit 
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pension plans, not defined contribution plans like the DCP. Thus, 

shortly before the Hourly Plan terminated, participants were given 

choices on how their DCP balances would be paid. 

Absent a valid election to the contrary, your 

was paid to you. You have stated that you, and 

named, received approximately $23,000 each 

approximately in 2003. 

full DCP balance 

the other 3 you 

from the DCP, 

DCP Balances PBGC Used 

The employment of the 3 other participants you named ended on 

February 28, 2001, 1 day before your employment ended. The Benefit 

Statements you provided show PBGC used the following data: 

I I Projected Annuity 

DCP Factor for I Account at Equivalent , i Years , Balance i DCP to ! 

8.5% & 5.6% age 62 i at age 62 , 

Name Date I Balance age 62 interest * (4 ) x (S) (6) +133 .1215* (- \ (2) I (3 ) (4 ) i 

\ .t , (5) (6) (7) 

2001 $32,499 18.333 2.7962" $90,873 $682.63 

2001 $30,802 12.917 2.0817 4 $64,121 $481. 67 

2002 $27,037 16.417 2.4462 5 $66,138 $496.82 

, 2002 $34,790 12.417 1.9671 6 $68,436 $514.08 

'* See Favorable PBGC Assumptions on page 4. 

PBGC effectively used a 

account balance for you 

termination date. 

$35,501.62 {$32,498.70 

on the Hourly Plan's 

x 1.085 1 1/12} 

March 31, 2002 

Your DCP Offset Under the Hourly Plan Document 

To calculate the DCP Annuity Equivalent offset, the Hourly 

Plan document requires: 

(1) Start with the actual account balance at the end of the 

month in which the participant elects to commence payment of 

any portion of his DCP account. 7 

3 1. 085 1.083 x 1. 056 17.25 

4 1.085 1.083 x 1.056 11.834 

5 1.056 16.4l7 

6 1.056 12.417 

7 See Enclosure 1 page 35 section 3.5(b) (1) (i). 
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(2) From that date, accumulate ("project") the full account 

balance with 8.5% annual interest to the earliest unreduced 

pension start date, age 62 under your 40/15 Deferred Vested 

Pension. See Enclosure 1 pages 33-37. 

(3) Convert the projected account balance with a prescribed 

Annuity Factor. 

PBGC Benefits Determined as of Plan Termination 

PBGC took control of most Hourly Plan assets when the Hourly 

Plan terminated March 31, 2002. However, the law prevented PBGC 

from tak~ng control of DCP accounts such as yours. 8 Thus, your 

DCP balance was not transferred to PBGC. Instead, when the Hourly 

Plan terminated, LTV transferred DCP assets on your behalf to the 

new LTV Steel Hourly Defined Contribution Pension Plan. 9 

The law also requires PBGC benefits to be determined as of a 

plan's termination date. Therefore, instead of using $35,501.62, 

both the Hourly Plan and law require using the $30,773.68 actual 

balance transferred from the Hourly Plan for you at plan 

termination. 

Favorable PBGC Assuwptions Used after Plan Termination 

For the period after the Hourly Plan's March 31, 2002 

termination, PBGC favorably substituted PBGC's own actuarial 

assumptions for you and your coworkers. Thus, favorably for you, 

PBGC both: 

(i) used PBGC's 5.6% interest rate in effect when the Hourly 

Plan terminated, instead of 8.5%, producing a lower projected 

DCP balance, and 

(ii) substituted PBGC's annuity factors, using 133.1215 for 

you instead of 103.193, creating smaller offsets. 

Therefore, using your corrected actual account balance, your DCP 

offset is $591.75,10 instead of the $682.63 PBGC used. 

DCP Values Grow the Most for Younger Participants 

We found your DC? offset is higher than for your 3 coworkers 

primarily because you are youngest. A particular DCP balance is 

more valuable for retirement purposes to a young participant, 

8 Employee Retirement Income Security Act of 1974 ("ERISA"), 

section 4021 (b) (12) 

9 The LTV Steel Hourly Defined Contribution Pension Plan was 

effective March 31, 2002. See Enclosure 2. 

10 ($30,773.68 x 1.056 17.25) + 133.1215. 
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because he may earn interest the longest before purchasing an 

annuity when he retires. 

Similar Benefits Divided between Plans Differently 

The Hourly Plan was designed so a participant's total benefit 

from all LTV sources would be a predictable amount defined in the 

Hourly Plan. Your total defined benefits under successive versions 

of the Hourly Plan were $1,048.89, $1,203.34 and $1,329.98, 

comparable to your 3 co-workers' benefits. See footnote 1 on page 

1 of this letter, or PBGC's Benefit Statement. 

Because of your relative youth, LTV is providing more of your 

retirement benefit through the DC? than for your older coworkers. 

Thus, your PBGC-guaranteed Hourly Plan benefit was lowest, but the 

projected value at retirement of your LTV-provided DCP account 

balance is the highest. 

Decision 

Having applied Hourly Plan provisions and the law to the facts 

in your case, we are increasing your benefit to $544.25 1:1. per month 

if paid as a Straight Life Annuity starting I 12019. You may 

start your benefit as early as August 1, 2017 with a reduction for 

beginning early. 

This letter concludes your administrative remedies with 

respect to PBGC's August 18, 2005 determination. You may, if you 

wish, seek court review of this decision with respect to the issues 

you raised. Thank you for your patience while we carefully 

reviewed your appeal. 

Sincerely, 

cjt~( ~ .. n 

William D. Ellis 

Appeals Board j\~ember 

Enclosures: 

(1) Excerpt from Hourly Plan Document (7 Pages) 

(2) IRS Form 5500 for LTV Steel Hourly Defined Contribution 

Pension Plan, your final LTV DCP, showing I I 2002 

effective date ~ ____ --1 

11 $1,048.89 benefit under oldest plan + ($1,203.34 

$1,048.89) x 40% guaranty of benefit increase + ($1,329.98 

$1,203.34) x 20% guaranty of benefit increase - $591.75 DCP offset