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Pension Benefit Guaranty Corporation P-EG 1200 K Street;N.W., Washington, D.C. 20005-4026 

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41 MAR 1 7 2004 

Re: Case 017852, Washburn Wire Company New York 

Hourly Pension Plan 

The Appeals Board reviewed your appeal of PBGC's August 7, 2003 determination that 

you are not entitled to a PBGC-guaranteed benefit under the Washburn Wire Plan and found no 

basis for changibg the determi&on. However, as explained below, the Board found that you 

may be entitled to a benefit as a result of the settlement of a class action lawsuit. 

PBGC's August 7, 2003 let& said that (1) you accrued 12.25 years of vesting service 

under the Plan from January 1, 1963, to April 1, 1975, (2) you bad a break in service of over one 

year which cancelled your previous service, and (3) you had an additional month of service in 

1976. PBGC also said that a participant needed 15 years of Vesting service under the 1972 Plan 

and 10 years of Vesting Service under the 1976 Plan to be eligible for a retirement benefit. Your 

September 4, 2003 appeal said that you worked for the Company from 1963 to 1976 and did not 

have 15 years of service, because you were "let go dk to job loss." 

Plan Provisiom 

The provisions of the July 31, 1972 Plan document were in effect during 1975. Under 

paragraph 2.6 of the 1972 Plan, a Participant "whose continuous service kbroken on or after 

July 31, 1972 for any reason other than discharge and who, at the time of such break in 

continuous service shall have had at least 15 years of continuous service and shall have attained 

the age of 40 years shall be eIigible for a [deferred vested] pension." Although PBGC's August 7, 

2003 determination referred only to the 15-year service requirement, you could not have satisfied 

the agd# requirement until January 6, 1978, after your empl&ment with Washbum ended. 

Continuous service under the 1972 Plan is calculated from a participant's last hiring date 

or, in the case of a break in continuous service, the date of reemployment. According to 

paragraph 5.1 (a): 
There shall no deduction for any time lost which does not.comtitute 

a break in continuous service, except that in determining length of 

continuous service for pension purposes that portion of any absence 

which continues beyond two years from commencement of absence 

due to a layoff or physicat disability, shall not be creditable as 

continuous service . . . 

Paragraph 5.1@) provides, generally, that continuous service is broken by quit, discharge, . 

termination, and an "absence which continues for more than 2 years . . ." 

The Plan in effect during 1976 was the restated and amended Plan that became effective 

January 1, 1976 and which PBGC determined was adopted on October 29, 1976, just before the 

Plan's termination date. This 1976 Plan, adopted to meet the minimum requirements established 

by the Employee Retirement Income Security Act (ERISA), reduced thk vesting requirement from 

'15 years and age 40 to 10 years with no age requirement. The 1976 Plan, like the 1972 Plan, 

provided for accrual of vesting service for two years after a layoff. 

After you contacted PBGC to request a benefit, PBGC examined Plan records obtained 

after the Plan terminated and found mi records or other information to show you were a Plan 

participant. PBGC then sent you a Plrm Parti~i~m Infonmfion form on which you said (1) you 

were born (2) you worked as an hourly employee for Washburn Wire in 

Manhattan, New York, from January, 1963 to 1976; (3) you were a member of &CIO Local 

2063; and (4) your employment ended because of the plant's bankruptcy. You also submitt@ 

copies of eight weekly Washburn pay stubs for the seven cckecutive -pay periods beginning 

February 1, 1975 and ending March 15, 1975, and for the pay period ending May 29, 1976. 

With your permission, PBGC obtained your Social Security earnings history for the years 

1963 through 1976. The Social Security data (copy enclosed) show earnings from Washbum from 

the fmt quarter of 1963 through the first quarter of 1975, and again in the second quarter of 1976. 

PBGC used this data in making its August 7.2003 determination that you (1) earned 12.25 years 

of credited service through April 1, 1975, (2) had a break in service after that date which caused 

you to forfeit your prior se&ice, and (3).earned only one month of credited service after you were 

rehired in 1976. Because of the 1975 break in service, PBGC concluded that you had not satisfied 

the 45-yearlage40 requirement for vesting in effict at that time under the, 1972 Plan, nor did you 

satisfy the 10-year vesting requirement under the 1976 Plan in effect when you were rehired. 

In a February 12,2004 telephone conversation with the analyst assigned to look into your 

appeal, you indicated that you were laid off in 1975 and recalled in 1976. You also said that in 

all your employment at Washburn you had never quit, been discharged or been terminated. You 

said that these events occurred almost 30 years ago and that you no longer have any documents 

regarding them. The Appeals Board found these statements, your Social Security earnings history 
and the payroll stubs you submitted consistent with PBGC's determination that you earned 12.25. 

years of credited service through the fmt quarter of 1975. The Board fuaher found this 

information consistent with your being laid off (rather than terminated) in' 1975 and recalled 

(rather than reemployed) for a short. period in the second quarter of 1976. 

Because the Appeals Board found that your absence beginning in 1975 was due to a layoff 

and that your 1976 recall occurred within two years of the layoff, we further found that you-did 

not have a break in service under paragraph 5.1 of @e 1972 Plan. Thus, when your employment 

at Washburn ended, you had more than 10 years of continuous service and satisfied me 1976 

Plan's newly-established, more liberal. 10-year vesting provision. However, as described in the 

next section, PBGC does not guarantee that vested benefit because your entitlement to it resulled 

from an amendment to the Plan adopted less than 12 months before the Plan's termination date. 

PBGC's Guar- 

' When the Washburn Wi Plan knninated, effective October 31,1976, its assets were not 

suff~cient to provide all benefits PBGC guarantees under Title IV of ERISA. For a benefit to be 

guaranteeable, PBGC's regulations require that a Micipant satisfy the conditions of the plan 

necessary io establish the right tomxive the benefit before the eirlier of the date the participant's 

employment ended or the date the plan terminated (29 Code of Federal Regulations (CFX) Part 

4022.4(a)). Because of legal liitions under ERISA and PBGC's regulations, the. benefits 

' PBGC guarantees may be less than the benefits a pension plan would otherwise pay. 

ERISA sections 4022(b)(l) and @)(7) phase-in PBGC3sguarantee of "any increase & the 

amount of benefits under a plan resulting from a plan amendment" made or effective within the 

five years before Plan termination. This phase-in'is equal to the greater of 20 percent of the 

benefit increase per month, or $20.00 per month @ut not more than the amount of the increase), 

for each full year the Plan amendment was in effect before Plan termination. Under ERISA, the 

time a benefit increase is in effect begins with the later of the date the increase was adopted or the 

date it beme effective. Thus, PBGC cannot guarantee any benefit increase in effect for fewer 

than I2 full months before plan tennination. 

PBGC's regulations also provide that a benefit increase subject to phase-in includes, but 

is not limited to, any change in plan provisions that advances a participant's entitlement to a 

benefit, such as a liberalized vesting schedule (29 CFR Part 4022.2). 

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

this case, the Appeals Board found no basis for changing PBGC's determination that you are not 

entitled to a PBGC-guaranteed benefit under the Washburn Wire Plan. Although the Board found 

that you are vested under the tern of the 1976 Plan, you are not entitled to a PBGC-guaranteed ' 

benefit because of the ERISA phase-in limit described above. Therefore, we are denying your 
appeal. This is the Agency's fml decision concerning your entitlement to a PBGC-gwrunfeed 

benefit and you may, if you wish, seek court review of this issue. 

. . 

Please note, however, that although -you are not entitled to a guaranteed benefit from 

PBGC, based on the information you provided, you may be entitled to a benefit payable by -PBGC 

as a result of the settlement of the class action lawsuit, &%tie v. PBGC . That case was brought 

by participants in certain pension plans with, among otber things,'vesting schedules that were 

amended to comply with ERISA's miRimum.vesting requirement and termination dates between 

January 1, 1976, &I December 31, 1981. 

We will send a copy of tbis decision to the PBGC organization responsible for 

implementing the settlement of the lawsuit. They will contact you directly coIlcerning any 

settlement benefit that may be owed to you.under Renie V. PBa. Meanwhile, if you need 

further information, please call PBGC's Customer Service Center at 1-800-400-7242. 

Sincerely, 

Linda M. Mizzi 

Member, Appeals Board 

Enclosure