"v(\ 

PBGC 

Protecting America's Pensions 

Pension Benefit Guaranty Corporation 

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

March 29, 2007 

Re: I I, Case # 19813300, Ajax Magnethermic Corporation 

Employees' Pension Plan (the "Ajax Plan") 

Dear 1 I: 

The Appeals Board reviewed your appeal of PBGC's June 30,2006 determination 

of your benefit under the Ajax Plan. For the reasons explained below, we must deny 

your appeal. 

PBGC's Determination and Your Appeal 

PBGC's June 30, 2006 letter said that you are entitled to a benefit of $580.78 

per month in the form of a Ten Year Certain and Continuous Annuity. Although this 

amount is smaller than the $582.21 estimated benefit you are currently receiving, the 

letter explained that PBGC will not change your benefit amount because the difference 

is $5.00 or less. PBGC also enclosed a benefit statement showing the information 

PBGC used to calculate your benefit, which you did not dispute. 

Your July 19, 2006 appeal asked that PBGC pay your benefit as a single lump 

sum instead of a monthly annuity. You said that your employment with Ajax was 

officially terminated on May D, 2002. On May 13,2002, in accordance with Company 

policy, you submitted a request to the prior Plan Administrator to receive your full Plan 

benefit in a single lump sum payment of$113,152.40, the value determined by Watson 

Wyatt Worldwide, the Plan's Actuary. You said you never received a response to your 

request. 

You also said that you made several requests to PBGC for a lump sum payment, 

both before and after PBGC officially took over the Ajax Plan, which PBGC eventually 

rejected. Your appeal specified three reasons why you believe PBGC's determination 

to pay your benefit as a ,monthly annuity instead of a single lump sum is wrong: 

1. Your request to. Ajax was "timely and in accordance with policy;" 

2. Your requests to PBGC were made prior to and after PBGC assumed 

responsibility for the Plan; and 
3. You believe sufficient funds are available for payment. 

You provided a chronology of events you believe to be relevant to your appeal along 

with a series of attachments documenting your efforts, initially with the prior Plan 

Administrator and later with PBGCi to receive your retirement benefit as a lump sum. 

Background 

The Ajax Plan terminated, effective September 10, 2002, without sufficient 

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

Retirement Income Security Act (IIERISAII). PBGC became the Plan's trustee on 

July 21, 2003. The terms of the Plan in effect when your employment ended, the 

provisions of ERISA, and PBGC regulations and poliCies determine your entitlement to 

a PBGC benefit. 

After a plan terminates, PBGC will pay retirees on an estimated basis until PBGC 

can collect plan records, audit data and determine guaranteed benefit amounts. If the 

estimated amounts are higher, PBGC must recover the overpayments. If they are 

lower, PBGC will pay any underpayments in a single payment, with interest. 

Effective August 1, 2004, PBGC began paying you an estimated benefit of 

$699.39 per month. (PBGC actually made the first monthly payments on October 1, 

2004, and sent you a separate check for $1,398.78 to cover backpayments for August 

and September). In response to a request to review your estimated benefit calculation, 

PBGC wrote you on October 31, 2005 and explained the following: 

1. PBGC cannot make a lump sum payment of your full Plan benefit because 

the value of your benefit was over the $5,000 statutory limit. Thus, PBGC 

was required to pay your benefit in the form of a monthly annUity. See 

29 Code of Federal Regulations § 4022.7(b)(1)(I). 

2. Under PBGC policy, you were eligible for a retroactive annuity start date 

of June 1, 2002. Accordingly, PBGC would reduce your estimated 

monthly benefit from $699.39 to $582.21 to reflect the earlier start date. 

PBGC's letter also explained that you were eligible for backpayments from 

June 1, 2002, and that your total backpayment amount would be reduced 

by your previous overpayments. ' 

On December 1, 2005, PBGC changed your estimated monthly benefit to $582.21, and 

sent you a check for $14,591.16 (i.e., a net backpayment of $13,262.58, plus 

$1,328.58 in interest). 

Discussion· 

Section 5.4-7.0.1 of PBGC's policy on Annuity Benefit Forms provides that, if a 

participant filed a "valid application" on or before the later of the Pian's termination 

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date (September 10,2002, in this case) or the PBGC trusteeship date (July 21, 2003), 

PBGC will pay the benefit in the form elected on the plan application if the form is a life 

annuity form, even if not yet in pay status. 

In response to an inquiry on your behalf, Vincent Snowbarger, then PBGC's 

Deputy Executive Director, Office of Policy & External Affairs, wrote to your 

Congressman, the Honorable Timothy Ryan, on May 24, 2006. This letter explained 

that "if a lump sum under the plan is due (emphasis added) before the plan 

termination date, PBGC will pay it (if sufficient assets are available) because the posttermination annuity payment rule [limiting lump sum payments to benefits whose 

value is $5,000 or less} does not apply to benefits due before the plan termination 

date." See Code of Federal Regulations § 4044.3(a) and (b). The letter accurately 

pointed out that "the threshold issue in this case" is whether you had established your 

entitlement to a lump sum under the Plan before the Plan's termination date. 

The documents you submitted with your appeal show that, on May 13, 2002, 

four days after your employment with Ajax terminated, you sent an email to the prior 

Plan Administrator from your wife's email account requesting payment of your full Plan 

benefit as an immediate lump sum, and received no response. PBGC's records show 

that the individual administering the Plan during that period was terminated by Ajax 

on June 28,2002, about six weeks before the Plan terminated on September 10, 2002. 

, Under Plan Section 5.7(a), the benefit of a married participant will be paid in the 

form of a Joint and 50% Survivor Annuity (J&50%SA), unless the participant's spouse 

refuses the J&50%SA form of benefit by waiving it in writing. A participant whose 

spouse executes a valid waiver of the J&500

/oSA may elect to receive his retirement 

benefit as a single cash payment equal to the actuarial eqUivalent, as defined under 

the Plan, of the participant's normal monthly retirement benefit. 

According to the information in PBGC's files, the Plan's application for retirement 

benefits included a Pension Benefit Selection Form, which included a J&50% SA waiver 

section with blank lines for the signature of the spouse and a witness. The only 

document available to the Appeals Board relating to your request to retire is the email 

sent to the prior Plan Administrator from your wife's email account. In a letter dated 

May 30, 2006, your wife, I I, stated that she was never informed that she 

needed to sign a waiver of rights and that she assumed the prior Plan Administrator 

understood that she concurred with your election to receive your benefit as a lump 

sum. 

Nevertheless, PBGC has no evidence that you ever completed, Signed and 

submitted the Plan's retirement application with your wife's written consent to waive 

the J&50% SA. Without such a completed application, PBGC cannot pay your 

retirement benefit in the form of a lump sum. While we are sympathetic to your 

situation, PBGC and the Appeals Board must follow the terms of the governing Plan 

document, the law and applicable regulations and policies. 

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Finally, your appeal said that you believe the Plan was sufficiently funded to pay 

you a lump sum. Please note that the May 24, 2006 letter from Mr. Snowbarger 

explained the requirements for valuing assets and liabilities in a terminated plan. The 

letter further explained that, as of the PIan's September 10,2002 termination date, the 

"Plan's assets were $6,130,610 and its liabilities were $9,975,185, for a total shortfall 

of $3,844,575; the shortfall for guaranteed benefits amounted to $3,647,306." 

Decision 

Having applied the terms of the Plan, the provisions of ERISA, and PBGC's 

regulations and policies to the facts in your case, the Appeals Board found no basis for 

changing PBGC's June 30, 2006 determination that you are entitled to a benefit of 

$580.78 per month in the form of a Ten Year Certain and Continuous Annuity. (PBGC 

will, however, continue to pay you $582.21 per month.) This is the Agency's final 

decision concerning your benefit form and you may, if you wish, seek court review of 

this decision. 

Sincerely, 

Linda M. Mizzi 

Member, Appeals Board 

cc:1 ~--------------------~ 

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