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

we WWW.P~~C.~OV 

April 29, 2005 

Re: Case Number 196153 

McCook Metals, LLC Pension Plan for Hourly Employees 

(the "McCook Plan") 

Dear 1 1 

The Appeals Board has reviewed your appeal of PBGC's 

February 16, 2005 determination of your guaranteed Plan benefit. 

As explained below, we are changing your benefit to 70180 

Retirement. Therefore, we are increasing your guaranteed benefit 

to $354.75 per month through April 1, 2009 (age 62) , and $337.01 

per month thereafter. 

Benefit Determination and A~peal 

PBGC determined your guaranteed benefit is $88.18 per month 

under the Plan's 30-year Retirement. PBGC found you are not 

entitled to the 70180 Retirement benefit1 you have been receiving. 

Your benefit is a Joint and 50% Survivor Pop-up Annuity. PBGC 

explained the $88.18 benefit will be temporarily reduced 10% until 

your overpayments have been repaid. You will not be charged 

interest on your overpayments. 

In your March 12, 2005 appeal: 

You asked PBGC to reinstate your 70/80 Retirement benefit 

As explained below, the Appeals Board granted your request and 

reinstated your 70/80 Retirement benefit. However, your 70180 

benefit is still subject to legal limits on PBGC's guarantee. 

. You questioned the Reynolds Plan offset PBGC is using to 

calculate your McCook Plan benefit. 

Our research indicates the Reynolds Plan began paying you a 

$1,097.25 {$1,155.00 x .95 annuity form factor} per month 

named "Special Early Retirement" in the McCook Plan 

document, and described elsewhere as the "70-80 Special Pension" 

The Reynolds Metals Company Pension Plan for Hourly 

Employees 
Joint and Survivor annuity effective on your April 1, 2002 

McCook Plan retirement date. Below in this letter we use 

your actual Reynolds Plan benefit to calculate your McCook 

Plan benefit. 

Discussion 

You Qualified for 70/80 Retirement 

The McCook Plan provides 70/80 Retirement to a participant 

such as you: 

(1) who has at least 40 quarters of service, 

(2) who is below age 62, 

(3) whose age plus service totals at least 80 years, and 

(4) who 'on or after June 16, 1998 has been absent from work 

for a period less than two years by reason of a displacement 

resulting from a permanent shutdown of a plant, department or 

substantial portion thereof." 3 

Your last day of work was March 18, 2002, the same day McCook 

declared a shutdown. PBGC found "the company had declared a 

shutdown, and terminated substantially all employees by March 31, 

2002." You were age 54 years 10 months on March 18, 2002, and 

PBGC determined you earned 31.75 years of service. See Enclosure 

2. Thus, you plainly met all of the McCook Plan document's 

conditions (1) - (4) for a 70/80 Retirement. 

Why PBGC Denied You 70/80 Retirement 

PBGC denied the McCook Plan's 70/80 Retirement benefit to 

certain participants, such as, who are you eligible for a Reynolds 

Plan 30 Year Retirement. PBGC found participants such as you may 

already be receiving shutdown benefits from the Reynolds Plan. 

PBGC concluded that in these circumstances the McCook Plan could 

not have been intended to pay 70/80 Retirement shutdown benefits 

too. 

The Appeals Board decided PBGC must apply the McCook Plan's 

plain reading regardless of whether you are receiving a Reynolds 

Plan shutdown benefit. Further: 

See Enclosure 1, Section 111 (7), page 5. 

PBGC's Agreement for Appointment of Trustee and Termination 

of Plan, signed and date August 22, 2002, page 2, Section G. 
The Board noted the Reynolds Plan 30-Year Retirement's graded 

minimum supplement is payable only to age 62. The McCook's 

70/80 Retirement provides a permanent Pension Factor 

supplement. See the McCook Plan benefit calculations below. 

The Reynolds Plan paying any such temporary supplement under 

30-Year Retirement should not prevent the McCook Plan from 

paying a permanent supplement under 70/80 Retirement. 

The Appeals Board's research indicates the Reynolds Plan is 

not paying you any shutdown benefits. 

For these reasons, the Appeals Board decided you are entitled to 

70/80 Retirement. 

70/80 Retirement Benefit Calculation 

70/80 Lifetime Annuity Reduced by Reynolds Plan Benefit 

The 70/80 Special Early Retirement provides a lifetime 

annuity, including a "Pension Factor" permanent supplement, plus a 

$400.00 per month temporary supplement until age 62. The Pension 

Factor supplement applies to full-time employees such as you in the 

International Brotherhood of Electrical Workers (Local 134) 

bargaining unit. 5 

Your total lifetime annuity is reduced by the benefit you had 

accrued under the Reynolds Plan on June 16, 1998. See Enclosure 1 

page 8. Your Reynolds Plan 30-Year benefit is unreduced for 

starting early on April 1, 2002. See Enclosure 3 Scenario 2. 

Combined McCook Plan and Reynolds Plan Lifetime Annuity 

Your combined McCook-Reynolds lifetime annuity if paid as a 

Straight Life Annuity, before reducing for your Reynolds Plan 

Accrued Benefit, is $1,746.25 i31.75 years total service x ($41.25 

accrual rate + $13.75 Pension Factor permanent supplement under 

70/80 Special ~arly)} . Your total combined lifetime annuity in 

your Joint and 50% Pop-up Survivor Annuity form is $1,658.94 

($1,746.25 x .95 annuity form factor} per month. 

McCook Plan Lifetime Annuity Reduced for Reynolds Plan Benefit 

Your $1,658.94 per month total lifetime annuity must be 

reduced by your Reynolds Plan Accrued Benefit which: 

See Enclosure 1 page 15 

See Enclosure 1 page 8 paragraph (1) 

'See Enclosure 1 page 15 paragraph (ll), second subparagraph 
(i) is $1,155.00 {$41.25 accrual rate x 28 years of service} 

if paid as a Straight Life Annuity, 8 

(ii) omits the $13.75 Pension Factor permanent supplement 

accrual rate used to calculate your $1,595.00 combined McCookReynolds benefit, thus increasing your PBGC-payable McCook 

Plan benefit, and 

(iii) is $1,097.25 ($1,155.00 x .95 annuity form factor) per 

month if paid in the Joint and 50% Pop-up Survivor Annuity 

form you chose under the McCook Plan. 

Thus, your McCook Plan 70/80 Retirement lifetime annuity is $561.69 

($1,656.94 - $1,097.25) per month. 

Total McCook Plan 70/80 Retirement Benefit 

Your 70160 Retirement benefit includes a $400.00 per month 

temporary supplement payable until age 62, as noted above. Please 

see Enclosure 1 pages 11-12 paragraph (9). Therefore, your total 

McCook Plan 70/80 Retirement benefit is $961.69 {$561.69+ $400.00) 

per month before age 62, and $561.69 per month after reaching age 

62. The McCook Plan was paying you the same $961.69 per month 

amount when PBGC became the McCook Plan's trustee. 

Limits on PBGC's Guarantee 

The law requires PBGC to apply two limits to your guaranteed 

benefit, because the McCook Plan was not sufficiently funded for 

PBGC to pay all benefits: 

(i) PBGC may not guarantee any portion of your benefit beyond 

the dollar amount of your Normal Retirement Benefit payable as 

a Straight Life Annuity.9 Therefore, only $591.25 ($1,746.25 

- $1,155.00) of your $961.69 pre-age 62 benefit is 

guaranteeable. 

(ii) The McCook Plan was effective January 1, 1999, between 3 

and 4 years before the McCook Plan's March 31, 2002 

a AS noted above, your current $1,097.25 ($1,155.00 x .95 

annuity form factor) ~eynolds Plan is based on the same $1,155.00 

Accrued Benefit we calculate in this letter. 

See 29 Code of Federal Regulations ('CFR") S4022.21 (a) . 

Regulation S4022.21 (a) has certain exceptions which do not apply to 

you. 
termination date. Under the law's 'phase-inu rules, PBGC 

may guarantee only $354.75 ($591.25 x 60%) of your 

guaranteeable pre-age 62 benefit, and $337.01 {$561.69 x 60%) 

of your age-62 benefit. 11 

PBGC reduced your benefit from $961.69 to $354.75 shortly 

after the McCook Plan's March 31, 2002 termination. Therefore, you 

have been overpaid less than the $15,098.98 total PBGC determined. 

PBGC's Authorized Representative will recompute your overpayment 

total and contact you about temporarily reducing your guaranteed 

benefit to repay your overpayments. 

Decision 

Having applied plan provisions and the law to the facts in 

your case, we are granting your appeal. Your guaranteed benefit is 

$354.75 per month through April 1, 2009, and $337.01 per month 

beginning April 1, 2009. 

This letter concludes your administrative remedies with 

respect to PBGC's February 4, 2005 determination. You may, if you 

wish, seek court review of PBGC's determination with respect to the 

issues you raised. Thank your for your patience while we carefully 

reviewed your appeal. 

Sincerely, 

- 

William D. Ellis 

Appeals Board Member 

Enclosures: 

(1) Excerpts from McCook Plan document (19 pages) 

(2) Benefit Statement enclosed with PBGC's February 16, 2005 

determination (3 pages) 

(3) Reynolds Metal Company September 15, 1998 letter 

explaining division of benefits between Reynolds Plan and 

McCook Plan (6 pages) 

lo The "phase-in" rules apply if a plan terminates less than 

5 years after either its effective date or its adopted date. See 

section 4022(b) (7) of the Employee Retirement Income Act of 1974 as 

amended ("ERISA"), and 29 CFR 84022.24 and 84022.25. 

l1 Your $354.75 pre-age 62 benefit includes $337.01 ($561.69 

x 60%) of your $561.69 McCook Plan permanent lifetime annuity and 

$17.74 ($354.75 - $337.01) of your $400.00 pre-age 62 supplement.