Pension Benefit Guaranty Corporation 

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

SEP 2 3 2004 

Re: 1 Case 179944, International Boiler Works 

(IBW) Retirement Plan (the Plan) 

The Appeals Board reviewed your appeal of PBGC's June 9, 2003 

determination of your benefit under the Plan. For the reasons 

stated below, the Board changed PBGC1s determination by increasing 

your PBGC benefit from $10.46 per month payable as a Ten-Year 

Certain and Continuous Annuity (10C&CA) to $28.06 per month payable 

as a Straight Life Annuity (SLA) and increasing the lump-sum value 

of your benefit as of the Plan's termination date from $355 to 

$867. 

PBGC's Determination and Your Atweal 

PBGC's letter explained that you were entitled to receive a 

lump-sum benefit of $355, plus interest from the Plan's termination 

date (September 11, 1996) to the date of payment, or a deferred 

lifetime annuity. PBGC provided a Benefit Statement, detailing the 

information used to calculate your benefit and showing that instead 

of a lump-sum payment, you could have elected to receive a monthly 

benefit of $10.46 per month beginning at age 65 payable as a 

10C&CA. PBGC records show that you chose the lump-sum option. 

Your July 23, 2003 appeal said that IBW advised you that when 

IBW was sold, you would be 100% vested in the Plan. Your letter 

also mentioned that although you did not have a copy of the 

document, IBW also advised you that the lump-sum value of your 

benefit was close to $5,000 and asked us why the amount calculated 

by PBGC is so much lower. 

Discussion 

1. Background 

PBGC provides pension insurance according to the Employee 

Retirement Income Security Act of 1974, as amended (ERISA). If a 
plan sponsor is unable to support its pension plan, PBGC becomes 

trustee of the plan and pays pension benefits as defined in the 

plan subject to limitations set by Congress under ERISA. 

2. Your Vested Percentage under the 1984 Plan 

Section 1.59 of the Plan's governing document effective 

April 1, 1984 (the 1984 Plan) defined "Vested" as meaning the 

portion of a Participant's Accrued Benefit that is nonforfeitable. 

Section 5.8(b) of the 1984 Plan states that the "Vested portion of 

any Participant's Accrued Benefit shall be a percentage of such 

Participant's Accrued Benefit determined on the basis of the 

Participant's number of Years of Service according to the vesting 

schedule specified in the Adoption Agreement." Section 6D of the 

1984 Adoption Agreement provides the following vesting schedule: 

Years of Sewice I Percentage 

1 6 vears 1 100% 1 

0-1 years 

PBGC files show your date of hire as November 4, 1991 and your 

date of termination as June 26, 1994. Based on this information, 

for vesting purposes, you earned two Plan Years of Service (from 

April 1, 1992 through March 31, 1994). Therefore, based on the 

table above, PBGC concluded that you were 20% vested in your 

Accrued Benefit. 

0% 

Records available to the Appeals Board indicate that PBGC 

determined that IBW formally adopted an amendment to the Plan on 

March 1, 1995 and that the amendment (the 1995 Plan) was made 

retroactive to March 1, 1989. The vesting schedule under the 1995 

Plan was changed to the five-year-cliff schedule under which a 

person does not become vested at all until after earning five Years 

of Service. However, because the 1995 Plan was adopted by IBW 

after your employment ended, PBGC preserved your vested accrued 

benefit under the 1984 Plan as of the date your employment ended in 

accordance with ERISA's requirements. 

We noted that section 9.2 of the 1995 Plan, as required by 

federal law, provides that if 

2 years 20% 
"the Employer terminates or partially terminates the Plan, or it is otherwise 

terminated or partially terminated, the rights of the Participants affected thereby to 

benefits then accnred, to the extent funded, shall be fully vested and nonforfeitable." 

(Underlining added. ) 

It appears that IBW was relying on section 9.2 when IBW told 

you that you would be 100% vested when IBW was sold. PBGC has no 

evidence that the Plan had sufficient assets to fund nonvested 

benefits at the time your employment ended, so the conditions for 

a "partial termination" benefit under section 9.2 may not have been 

satisfied. In any case, PBGC does not guarantee benefits that 

become vested as the result of the termination or a partial 

termination of a plan. Finally, due to the Plan's underfunding 

when it terminated, PBGC is unable to pay your nonvested benefits 

out of Plan assets. 

3. Your Statement That IBW Told You the Cash Value of Your 

Benefit Was Close to $5,000 

In reference to your statement that IBW told you the cash 

value of your benefit under the Plan was close to $5,000, please 

note that the Plan provides that if the value of a Participant's 

vested benefit is $5,000 or less, the Plan Administrator will cash 

out the benefit. This provision does not suggest you are entitled 

to $5,000.00. 

Although we did not find any statements from IBW that you had 

accrued a benefit with a cash value near $5,000, we did find a 

calculation of your accrued benefit as of the end of the 1992 Plan 

Year calculated by IBW's former actuaries, Creative Benefit 

Services (CBS). The Appeals Board confirmed that your accrued 

benefit at that time was calculated by CBS based on a reasonable 

application of the Plan provisions described in CBS's 1991 and 1992 

Actuarial Valuation Reports (AVRs). See Enclosure 1. 

Although the vesting schedule under the Plan provisions 

described in the 1991 and 1992 AVRs was the same as the vesting 

schedule in the 1984 Plan, the other Plan provisions described in 

the 1991 and 1992 AVRs were quite different from the 1984 Plan's 

provisions. After noting that plan actuaries generally do not 

calculate benefits for annual AVRs based on plan provisions that 

have not been adopted by the plan's sponsor and that the results of 

the 1991 and 1992 AVRs were used to pay lump-sum cashouts to 

several Plan participants, the Appeals Board decided that there was 

sufficient evldence to conclude that those Plan provisions were 

adopted by IBW, and therefore, to allow PBGC to calculate your 

vested accrued benefit under the Plan provisions described in the 

1991 and 1992 AVRs. 
Based on the above, the Appeals Board recalculated your 

benefit under the Plan provisions described in the 1991 and 1992 

AIRS. We have shown our calculation of your benefit on 

Enclosure 2. 

Decision 

Having applied Plan provisions and the law to the facts of 

this case, the Appeals Board changed your PBGC benefit amount from 

$10.46 per month payable as a 10C&CA to $28.06 per month payable as 

an SLA and the one-time lump-sum value of that benefit from $355 to 

$867. This decision is the agency's final action regarding the 

issues your appeal raised. You may, if you wish, seek court review 

of this decision. 

We will forward a copy of this decision to PBGCts Insurance 

Operations Department (IOD), the department that issues benefit 

determinations and pay benefits. After reviewing your payment 

history, IOD will calculate any amounts by which PBGC has underpaid 

you, and then pay any such additional amounts in accordance with 

applicable PBGC policies. 

In the meantime, if you have other questions about your PBGC 

benefit, please call PBGC's Customer Contact Center at 1-800-400- 

7242. 

Sincerelv. 

Michel Louis 

Appeals Board Member 

Enclosures (2)