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8 Pension Benefit Guaranty Corporation 

'? P-BEE 1200 K Street. N.W.. Washington. D.C. 200054028 

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n APR 0 4 2003 

Re: Appeal No. I Trans World Airlines, 

(TWA) Retirement Plan for Pilots (the Plan) 

Inc . 

Dear 

,The 

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Appeals Board reviewed your appeal of PBGC's September 20, 

2002 determination of your PBGC benefit. For the reasons stated 

below, we must deny your appeal. 

Determination and Appeal 

.PBGC determined that you are entitled to a PBGC benefit of 

$2,380.90 per month starting on February 1, 2001 (the first of the 

month following the Plan's Termination Date) payable as a Modified 

Cash Refund Life Annuity.' PBGC included a Benefit Statement, which 

shows information the former Plan administrator (TWA) used to 

calculate your Plan-defined benefit. The Statement also shows that 

PBGC used TWA's Plan-defined benefit amount to calculate your PBGC 

benefit. The Benefit Statement also showed that you were entitled 

to receive a temporary PBGC supplement of $220.69 per month from 

February 1, 2001 through July 1, 2002. 

Your November 1, 2002 form-letter appeal said that (1) PBGC 

did not provide you with sufficient information on the analysis 

that underlies the determination, and (2) without such information, 

it is difficult for you to know whether errors not apparent to you 

were made. Our Discussion below addresses those issues, and the 

other issues you raised. 

Discussion 

1. Request for Additional Information 

Because your appeal requested more information about your 

benefit calculation, the Appeals Board sent your request to PBGC's 

Disclosure Officer and informed you in a letter dated November 29, 

2002 that you had the option of supplementing your appeal within 30 

days after.his response. PBGC records show that the Disclosure 

Officer responded to your request on January 23, 2003 with copies 

1 Your MCRLA provides a benefit for the rest of your life. Also, because the 

Plan's former sponsor made special contributions on your behalf, your beneficiary 

will receive a benefit if you die before you receive pension payments equal to the 

special contributions balance. 
I. -2- 

f of the documents in your personal PBGC file. One of those 

10 documents shows how your Plan-defined benefit was calculated. See 

m 

c Encloaure 1. We received a letter dated February 21, 2003 from 

your attorney, in which you challenged the sufficiency of the 

Disclosure Officer's response under the Freedom of Information Act 

9 (FOIA). PBGC will respond separately concerning your request for additional documents under FOIA. The February 21, 2003 letter 

asserted four additional grounds for contesting the correctness of 

PBGC's determination, all of which we address in the remainder of 

this decision. 

2. Calculation of Your Plan-Defined Benefit and Your PBGC Benefit 

After the Plan terminated on January 1, 2001, PBGC personnel 

conducted an audit of the procedures TwA used in administering the 

Plan and calculating participants' Plan-defined benefits. After 

calculating benefits for a sampling of participants and comparing 

the results with the amounts that TWA calculated and stored in 

TWA's pension database, PBGC auditors concluded that the benefit 

amounts in TWA's database were reliable. So, in most cases and in 

your case in particular, PBGC accepted TWA's calculations, and then 

adjusted them to account for (1) pre-age-62 supplements, (2) early 

or late retirement, (3) annuity types selected by participants 

and/or their spouses, and (4) limitations on benefits set by 

Congress under the Employee Retirement Income Security Act of 1974, 

as amended (ERISA) . 

Documents in PBGC files reveal that the Plan did not have 

sufficient assets when it terminated on January 1, 2001 to provide 

all benefits that PBGC guarantees under ERISA. As a result, the 

provisions of the Plan, ERISA, and PBGC's regulations and policies 

determine the amount of: 

> your guaranteed benefit, 

> your ERISA 5 4044 benefit, and 

9 your ERISA 5 4022 (c) benefit. 

Enclosure 2 shows how PBGC calculated these benefit amounts. 

PLEASE NOTE that PBGC will always, even after an appeal is 

closed, consider any new, specific evidence that you present 

showing that you may be entitled to a higher benefit. If you have 

or obtain any such evidence, PBGC will certainly review it. Please 

send any such. information to PBGC's Insurance Operations 

Department, Attn: Trusteeship Processing Division #1, at 

P.O. Box 19153, Washington D.C. 20036. If you need additional 

information from PBGC, please call the Customer Service Center at 

1-800-400-7242. 
-3- 

3. Federal Litigation 

Your form-letter appeal includes claims that are being 

litigated against PBGC and other parties in two federal courts. The 

plaintiffs in the court cases allege among other things that the 

Plan was improperly terminated under ERISA. The form letter says 

that you are raising these issues in. order "to ensure that all my 

rights with respect to the issues in contention in those 

litigations are fully preserved." 

By way of background, Carl Icahn was the former controlling 

shareholder of TWA. TWA filed a bankruptcy petition in 1992 in the 

Bankruptcy Division of United States 'District Court for the 

District of Delaware. One of the issues involved in the bankruptcy 

was the status of TWA's underfunded pension plans, and the extent 

of Carl Icahn's liability, if any, in the event the plans 

terminated. Among other things, Mr. Icahn conditioned his 

willingness to provide TWA with a $200 million loan (which was 

necessary for TWA to survive and emerge from bankruptcy) upon some 

provision that fixed the amount of liability that he might incur 

towards the pension plan. Throughout these proceedings, the 

interests of the retired and active pilots were represented by the 

Air Line Pilots Association (ALPA). 

On January 5, 1993, TWA, ALPA (and other unions that 

represented TWA employees) , and PBGC signed a "Comprehensive 

Settlement Agreement" (CSA) under which: (1) Carl Icahn would loan 

TWA $200 million; (2) an Icahn-owned concern called Pichin took 

over sponsorship of the TWA Pension Plans, and agreed to become 

responsible for any minimum funding cost of the Plans that were not 

covered by a $300 million payment guaranteed by TWA; (3) it was 

agreed that the Plans would terminate if certain events occurred 

after 1993; and (4) if the Plans were thereafter terminated by 

PBGC, it was agreed that Icahn would pay PBGC $240 million dollars. 

The Bankruptcy Court approved the CSA, and it was later 

incorporated in a Plan of Reorganization approved by the Bankruptcy 

Court. Neither ALPA nor any other party took an appeal from that 

decision, which became final and binding. 

The TWA Pension Plans were terminated in 2001. Even though 

ALPA was one of the parties that negotiated and signed the CSA, it 

filed a suit to stop the termination and void its own settlement 

agreement. Judge Ricardo Urbina of the United States District 

Court for the District of Columbia dismissed the case on March 29, 

2002. Also, the Allied Pilots Association has assumed 

representation of former TWA pilots, and it is now litigating the 

appeal of Judge Urbina's ruling'. On May 15, 2002, eight former TWA 

1 A copy of Judge Urbina's decision is currently available on the A Plan 

Defense Fund's website at http://www.aplandefense.org/docurnents.htrnl. 
4 I 

! -4- 

w pilots filed another lawsuit challenging the termination, also in 

I 

2 Washington, D.C. The judge postponed litigation in the second case 

e until the appeal of the first case is decided. 

4 

8 While your appeal briefly summarizes the claims in these 

I cases, it does not identify any errors in PBGC's determination of 

your PBGC benefit based on either (1.) your personal data, (2) the 

Plan's provisions, or (3) ERISA provisions, given the Plan's actual 

status as a terminated, PBGC-trusteed plan. Please note that the 

Appeals Board does not have the authority to decide whether the 

Plan's termination was proper, or to change the termination date. 

In any event, the Board declines to decide the claims that are in 

litigation. 

4. Adjustment of Your Final PBGC Monthly Payment Amount 

While appeals are pending, PBGC generally continues to pay 

benefits at the estimated benefit level that PBGC was paying when 

PBGC issued the benefit determinations. The Appeals Board did not 

examine your individual payment history. When PBGC's Insurance 

Operations Department receives a copy of this decision, they will 

review your payment history, calculate the total amount by which 

PBGC has overpaid or underpaid you, and if necessary, adjust your 

monthly PBGC payment accordingly. 

Having applied the law and PBGC's rules to the facts in this 

case, the Appeals Board decided that we must deny your appeal. This 

decision is the agency's final action regarding your November 1, 

2002 appeal. You may, if you wish, seek court review of this 

decision. 

Sincerely, 

Michel Louis 

Appeals Board Member 

Enclosures (3)