Pension Benefit Guaranty Corporation 

1200 K Street, N.W., Washington, D.C. 200054026 ",--",,"-. 

JAN 2 9 2OfN 

Re: Appeal I MCD, Inc. Retirement Plan for 

Hourly Employees (the "Plan" ) 

The Appeals Board reviewed your appeal of PBGC's May 6, 2003 

determination that you have been entitled to receive a monthly 

benefit of $57.83 since December 1, 1996 (the first of the month 

following the date of Plan termination, November 8, 1996). For 

the reasons stated below, the Board changed PBGC's determination 

by finding (1) that you were not entitled to retire until 

April 1, 2002, the first of the month following your attainment 

of age 55, (2) that, as of April 1, 2002, you were entitled to 

receive a monthly benefit of $81.75, (3) that, as of your Normal 

Retirement Date, April 1, 2012 (the first of the month following 

your 65th birthday), you would be entitled to a monthly benefit 

of $163.50, and (4) that, since you were placed into pay status 

prior to your first date of eligibility, you may now elect to be 

taken out of pay status and to reapply and reenter pay status 

later or to remain in pay status and to receive a monthly 

benefit subject to the Plan's early retirement reduction factors 

applicable as of the effective date of your election. If, for 

example, the effective date of your election were March 1, 2004 

and you were to elect to remain in pay status, you would be 

entitled to receive a monthly benefit of $102.64 (expressed in 

the form of a Straight Life Annuity with no survivor benefits). 

PBGC's Insurance Operations Department ('IOD") will contact you 

directly regarding this election. 

Benefit Determination and A~~eal 

PBGC's May 6, 2003 letter stated that you are entitled to 

a monthly payment of $57.83, instead of the estimated monthly 

benefit of $145.50 you have been receiving. In your May 12, 2003 

appeal, you stated: 'I went out on disability on 7-19-94 not 12- 

1-96 [which was the disability retirement date that PBGC used]. 

I received no benefits for the period of 7-19-94 to 12-1-96. I 

come up with 29 or 30 months with no benefits. According to an 

amended sheet that was with one of our checks, I was to receive 
k 

F I $10.00 per year, for each year of service [whereas PBGC used a * 

o benefit rate of $9.00 per year of service]. That would be 

W 

4 $181.68 [18.1667 years of credited service x $10.00 benefit 

ID rate] in benefits for me." 

A~~licable Plan Provisions 

Section 2.2 of the Plan states that the Accrued Benefit 'of 

a Participant or Inactive Participant as of any date, 

hereinafter called the accrual date, before his Normal 

Retirement Age shall equal the sum of the benefits earned for 

each Year of Credited Service as provided in Section 5.1, prior 

to the accrual date." Section 2.7(a) defines Annuity Start Date 

as "the first day of the first period for which an amount is 

payable as an annuity . . .. ,, 

Section 2.15 defines Disability as follows: "Disability 

shall mean the permanent and total inability of a Participant to 

engage in any substantial gainful activity due to physical or 

mental impairment or both, which can be expected to result in 

death or, which has lasted for a continuous period of not less 

than 12 months. A Participant shall be considered disabled only 

if he is eligible for disability benefits from the Social 

Security Administration." 

Section 2.16 provides that Early Retirement Age "shall mean 

the first day of the month coincident with or next following Age 

55 and the completion of 10 Years of Service." Section 2.17 

provides that Early Retirement Date "shall mean the date on or 

after his Early Retirement Age on which the Participant elects, 

pursuant to Section 5.2, to retire from employment and begin 

receipt of early retirement benefits." 

Section 2.28 defines Normal Retirement Age as sixty-five 

(for all Participants, such as yourself, with at least five 

Years of Service). Section 2.29 defines Normal Retirement Date 

as 'the first day of the month coincident with or next following 

the Normal Retirement Age." 

Section 5.1 ('Normal Retirement") provides that the monthly 

normal retirement benefit shall be "Nine dollars ($9.00) times 

the Participant's number of Years of Credited Service (not to 

exceed 35 years) ." 

Section 5.2 ("Early Retirement") states: 'A Participant who 

has not attained his Normal Retirement Age (651, but has 
attained his Early Retirement Age 1551, may elect to retire as 

of the first day of any calendar month following written notice 

to the Employer and to the Committee. . . - Such early 

retirement benefit . . . shall equal his Accrued Benefit as of 

his Early Retirement Date, reduced by one-thirtieth (1/30) for 

each of the first five years and one-fifteenth (1/15) for each 

year thereafter by which his Early Retirement Date precedes Age 

sixty-five [which amounts to a 50% reduction at age 551." 

Section 5.3 ("Disability Retirement" ) states: 'A vested 

Participant who has not attained his Normal Retirement Age 1651 

and suffers Disability may elect Disability retirement under 

this Section 5.3. A Participant who is on Disability retirement 

shall continue to receive credit for Years of Credited Service 

under this Plan for purposes of Section 2.2 [Accrued Benefit], 

5.1 [Normal Retirement] and 5.2 [Early Retirement] until the 

earlier of any subsequent Annuity Start Date and Age sixty-five. 

,.. , 

Discussion 

In your appeal, you contended that your Disability 

Retirement Date should have been July 19, 1994 and that, as a 

result, you should rec,eive back payments to July 19, 1994. PBGC 

allowed you to retire effective December 1, 1996 (the first of 

the month following the date of Plan termination, November 8, 

1996), at which point you were only 49 years of age. In 

accordance with Section 5.2 of the Plan, however, the Board 

found that you were not entitled to retire e, commence 

receiving your monthly disability retirement benefit) until 

April 1, 2002 (the first of the month following your attainment 

of age 55). 

In your appeal, you stated that " [Alccording to an amended 

sheet that was with one of our checks, I was to receive $10 per 

year, for each year of service." As noted above, however, the 

Plan document states that the Plan's benefit rate was Nine 

dollars ($9.00) times the Participant's Years of Credited 

Service at Normal Retirement Age (Section 5.1) or at any earlier 

point at which the accrued benefit was calculated (Section 2.2). 

Accordingly, the Board found no basis presented in your appeal 

for changing PBGC's determination that the Plan's benefit rate 

was $9.00 per year of Credited Service. 

Under Section 5.3 of the Plan you continued to earn Credited 

Service after you became disabled, but under PBGC's regulations, 
dited Service ceased at the Date of Plan termination. Thus, 

PBGC credited you with 18.1667 years of Credited Service from 

your date of hire, October 17, 1978, through the date of Plan 

termination, November 8, 1996. 

Under Sections 2.2 and 5.3 of the Plan, your monthly Accrued 

Benefit payable on your normal retirement date, April 1, 2012, is 

equal to $163.50 (18.1667 years of Credited Service x $9.00 

Benefit Rate). Under Section 5.2, the monthly benefit payable at 

your earliest retirement date, April 1, 2002, is equal to $81.75 

($163.50 Accrued Benefit x 50% Early Retirement Reduction 

Factor). In addition, Section 5.2 provides that if you elect to 

retire between your earliest retirement date and your normal 

retirement date, your Accrued Benefit will be reduced by onethirtieth (1/30) for each of the first five years and onefifteenth (1/15) for each year thereafter by which your Early 

Retirement Date precedes age 65. 

Decision 

Based on its review of the Plan's provisions and PBGCrs 

policies, the Board found that since you were placed into pay 

status prior to your first date of eligibility, you may now elect 

to be taken out of pay status and to reapply and reenter pay 

status later to remain in pay status and to receive a monthly 

benefit subject to the Plan's early retirement reduction factors 

applicable as of the effective date of your election. As noted, 

IOD' will contact you directly regarding the election just 

described. In addition, IOD will contact you with regard to any 

alternate benefit forms that you may be entitled to elect and 

with regard to the recoupment of the overpayments that you have 

received. Please note, however, that recoupment is generally 

limited to 10% of your future monthly payments 

This is the agency's final action regarding the issues 

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

this decision. If you need other information from PBGC, please 

call our Customer Service Center at 1-800-400-7242. 

Sincerely, 

Michel Louis 

Acting Chair, Appeals Board