f1VA 


PBGC 

Protecting America's Pensions 

Pension Benefit Guaranty Corporation 

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

January 11, 2012 

Re: 	 Appeal Case 203572; Retirement Plan for Flight Attendants in 

the Service of US Airways, Inc. (the "FA Plan" or the "Plan") 

Dear 

This Appeals Board decision responds to your appeal of PBGC's December 10, 

2009 determination of your benefit under the FA Plan. As we explain below, the 

Appeals Board changed PBGC's determination by increasing your PBGC benefit. The 

following table summarizes the Board's changes: 

PBGC Benefit under PBGC Benefit 

Full Plan the 12/10/2009 Calculated by the 

Benefit Determination Letter Appeals Board 

$1,371.02 $1,371.02 

Benefit After Attainment of Age 62 $595.47 

Benefit Before Attainment of Age 62 $1,665.47 

$301.02 $595.47 

Total Overpayment through 2/1/2012 N/A $25,028.25 $6,772.35 

t Value of Termination Benefit as 

Plan's Termination Date N/A $73,000 $113,422 

Recoupment Percentage (Based on 

3/1/2012 Target Adjustment Date} N/A 10.00% 5.97% 

Monthly Recoupment Reduction 

Amount N/A $30.10 $35.55 

ced Benefit Amount N/A $270.92 $559.92 

Date of Reduced Benefit N/A 03/01/2012 03/01/2012 

e of Reduced Benefit N/A 05/01/2081 12/01/2027 

mount After Last M 


Benefit N/A 
 $301.02 $595.47 
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PBGC's Determination and Your Appeal 

PBGC's December 10, 2009 letter and accompanying Benefit Statement 

indicated that you were entitled to a PBGC benefit of $1,371.02 per month from 

February 1, 2005 until age 62 and $301.02 per month after age 62. The letter said that 

PBGC first determined the benefit to which you were entitled under the FA Plan, and· 

then applied the limits under the law. The Benefit Statement explained that the 

limitation under the law affecting your benefit is the Accrued-at-Normal limitation. 

PBGC's determination letter also noted that your benefit is payable under the FA 

Plan's Level Income Option ("LIO"). It explained that, under the UO, at age 62, your 

monthly benefit was reduced by an estimate of your Social Security benefit payable at 

that age. 

PBGC also determined that, as you received estimated monthly benefits larger 

than your PBGC benefit amount, PBGC had paid you $17,961.45 too much as of the 

Target Adjustment Date (March 1, 201 0). The letter explained that PBGC would reduce 

your future monthly payments by a small percentage until the total overpayment is 

repaid, without interest. We note that PBGC has continued to pay you $595.47 per 

month while your appeal has been under. review and your total overpayment has 

changed as a result of the changes the Appeals Board made to your final benefits. 

In your January[] 2010 letter, you asked the Appeal Boards for a filing 

extension. Your extension request said: 

A letter . . . dated December 10, 2009 . . . did not arrive before I had left for the 

Christmas holidays. It stated my new monthly benefit would be almost 50% less 

than what I am now receiving and what my retirement with US Airways had 

stipulated. Due to this drastic decrease in benefits & lack of sufficient time to file 

an appeal, I am requesting an extension for more time to file an appeal. 

The record shows that PBGC's Benefits Administration & Payment Department 

("BAPD" formerly known as the Insurance Operations Department) sent you a detailed 

Benefit Statement Worksheet on February D 2010. After you requested and were 

granted two additional filing extensions, you filed an appeal on June D 2010. Your 

JuneOappeal, filed using PBGC form 724, said: 

There are three reasons why the PBGC determination is incorrect. First is that a 

50% cut clearly contradicts PBGC's policy as stated in "Your Guaranteed 

Pension 2005" (PBGC publication 1022, January 2005) on page 1 - "Most 

people receive the full benefit they had earned before the Plan ended." Also, 

prior to and during the US Airways bankruptcy, employees were repeatedly 

assured by the Company, by our unions, and by PBGC that oniy workers who 

made over $40,000 would be affected or have their pension limited. A small 

reduction (as has happened to other US Airways pensioners) would be 

understandable, but 50% is just not right. 

Circular accounting is the second reason that this determination is incorrect. My 

original pension was $1665.47 and $595.47. PBGC says both these amounts 

(before and after the Social Security offset) should be reduced to $1371.02 and 
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$301.02. But in the eight pages and sixty line items of convoluted computations 

and calculations (PBGC Benefit Statement Worksheet- 3/~6/2010) it is never 

explained how this figures are derived. . . . Also both benefits are reduced by 

the same amount ($294.45). This suggests that no consideration was given to 

the .fact that the second amount is already being penalized as the Social Security 

offset. 

The third error is an incorrect entry on line #36. The correct amount should be 

$241.79 instead of $0.00 as my first and second change dates are the same. 

This also changes line #37 and subsequent amounts. This error raises the 

question of how many other mistakes might be involved in their determination 

worksheet and this entire process. 

Discussion 

1. Background 

PBGC provides pension insurance in accordance with the Employee Retirement 

Income Security Act of 197 4, as amended ("ERISA"). If a plan sponsor is unable to 

support its defined-benefit pension plan, PBGC becomes trustee of the plan and pays 

pension benefits as defined in the plan, subject to legal limitations and requirements set 

by Congress under ERISA. 

Records available to the Appeals Board show that the FA Plan terminated on 

January 1 0, 2005 and PBGC became the FA Plan's trustee on February 1, 2005. 

When PBGC becomes trustee of a terminated plan, PBGC collects participant 

data and plan documents, and audits that data. The information comes from a variety 

of sources, such as the plan's former administrator, the plan's former actuary, and the 

plan's former paying agent. PBGC necessarily relies on the information it receives from 

these sources unless (1) PBGC's audit of that information shows that it is wrong, or 

(2) a participant supplies PBGC with documents showing that the information is wrong. 

The records PBGC received from US Airways, Inc. ("US Airways") and your 

November 23, 2009 Benefit Statement show that (1) you were born on L________j 

L__- (2) you were hired on 1980; (3) your employment status changed to LFV 

on December D 2002 because you elected a voluntary furlough under the VF2 

program; (4) you terminated your employment with US Airways on 2004; 

(5) you elected to start receiving your benefit effective 2004; and (6) you were 

not married when you started receiving your benefit. You did not disagree with any of 

this information in your appeal letter. 

Other records available to the Appeals Board indicate that your date of hire 

corresponds with your employment commencement date as a Flight Attendant with 

I Iand that you were covered as a Flight Attendant 

under the Plan before the Plan merged into the FA Plan on 
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2. Your Estimated PBGC Benefit 

When PBGC becomes trustee of a terminated plan, PBGC generally continues to 

pay retired participants the same benefit amounts they were receiving from the plan's 

former administrator on an estimated basis while PBGC begins its audit of the plan. 

Thus, while PBGC accepted the benefits calculated by US Airways for participants like 

you as the correct amount of the full Plan benefit, that full Plan benefit became the 

estimated PBGC benefit when the Plan terminated because ERISA's limitations on 

PBGC benefits go into effect when a plan terminates. 

Due to the length of time it generally takes PBGC to complete the audit process, 

however, PBGC requires its actuaries to create estimation programs or procedures to 

determine whether any benefits in pay status are likely to be affected by the legal limits 

on PBGC benefits. If a participant's benefits are likely to be affected by legal limits, 

PBGC's actuaries calculate a new estimated PBGC benefit, and PBGC reduces the old 

estimated benefit the participant was receiving to avoid the hardship that might 

otherwise be caused by the need to repay an even larger overpayment amount. In your 

case, PBGC's initial review of your benefit in pay status did not result in a finding that an 

ERISA limitation would likely cause a significant reduction in your final PBGC benefit. 

The Appeals Board has reason to believe that, in most cases, the estimation 

programs and procedures developed by PBGC's actuaries result in estimated benefit 

amounts that are very close to final PBGC benefit amounts. Nevertheless, errors do 

sometimes occur. 

It is because errors do sometimes occur that PBGC generally does not issue 

formal determination letters until after it has completed its audits of a plan's records. 

Thus, when PBGC sent you and most other Flight Attendants a letter on February 14, 

2005, telling you that PBGC had become trustee of the FA Plan, it forewarned retired 

F,light Attendants that the benefits they would receive during PBGC's review of the 

FA Plan's records were only estimated benefits, as follows: 

First, we want to assure you that you will continue to receive benefits without 

interruption while we review your plan's records. These payments will be an 

estimate of the benefits that we can pay you under the Jaw. Once we finish our 

review, we will tell you in writing what your pension amount will be and what 

rights you have to appeal our decision. 

The Appeals Board certainly regrets any hardship that may result from the fact 

that PBGC's initial review did not identify a need to reduce your estimated benefit. As 

we explain later in this letter, however, Congress has limited the amount of a plan's 

benefits that PBGC may pay. 

3. Your Full Plan Benefit 

Enclosure 1 shows that US Airways calculated your full FA Plan benefit payable 

under the Plan's Level Income Option ("LIO") to be $1 .665.47 per month from 

-----------· 
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2004 through 2006, and $595.47 thereafter. PBGC's actuaries reviewed 

US Airways' calculation of your full Plan benefit amounts and accepted those amounts. 

The Appeals Board also accepted US Airways' calculation of your full Plan benefit. 

4. Your Final PBGC Guaranteed Benefit 

Your PBGC-guaranteed benefit payable under the Plan's LIO form is less than 

your full FA Plan benefit because your benefit is affected by one of the legal limitations 

on PBGC benefits. The legal limit that affects your benefit is called the Accrued-atNormal-Retirement limit (the "AAN limit"). 

The AAN limit is described in PBGC's regulations. PBGC's regulation on 

Benefits Payable in Single-Employer Plans (29 Code of Federal 

Regulations§ 4022.21(a)) states that PBGC may not guarantee any portion of an earlyretirement supplement that, when added to your regular monthly benefit, exceeds the 

benefit that you would otherwise receive under the Plan at your normal retirement age 

in the form of a Straight Life Annuity ("SLA"). 

We determined that, if you had waited until your Normal Retirement Age (age 65) 

to start receiving your benefit and had elected to receive your benefit in the form of a 

SLA, your benefit would have been $838.84 because $838.84 = $691.03 + $147.81, 

where $691.03 is the US Airways part of your accrued benefit that would be payable at 

age 65 calculated under the formula that provides the higher benefit (see line 2 on the 

fourth page of Enclosure 1); and $147.81 is your net accrued benefit that 

would be payable at age 651

. This $838.8~ amount is what PBGC generally calls your 

AAN limit amount. 

As shown on the second page of Enclosure 1, if you had elected to receive your 

benefit in the form of a SLA starting on April 1, 2004, your Plan-defined benefit payable 

before you attained age 62 would have been $1,133.29 and your Plan-defined benefit 

payable after you attained age 62 would have been $736.94. The difference between 

these amounts ($396.35) is your early-retirement supplement. 

In your case, because an early-retirement factor was applied in calculating your 

benefits under the Plan, a portion of your $396.35 early-retirement supplement is 

guaranteed by PBGC. The portion of your early-retirement supplement that is not 

guaranteed is equal to $1,133:29 minus $838.84 = $294.45. Thus, the portion of your 

$396.35 early-retirement supplement that is guaranteed by PBGC is $101.90, where 

$101.90 =$396.35 minus $294.45. 

We note that $544.16 is your gross accrued benefit under the Plan, where $544.16 = 

2% x $2:,889.32 x 9.4167, and $396.35 is equal to one-half of your estimated Social Security 

benefit ($792. 70) as defined in the Plan (see line 3 on the fourth page of Enclosure 1 ). 

Thus, if you had waited until age 65 to retire, thel I part of your accrued benefit payable 

as a SLA would have been $544.16 minus $396.35, which equals $147.81. 

1 
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Although you did not elect to receive your benefit in the form of a SlA, the 

portion of your early-retirement supplement that is not guaranteed by PBGC is the same 

because the Plan's LIO form of benefit is actuarially equivalent2 to the Plan's SlA form 

of benefit. Therefore, your final PBGC guaranteed benefit payable under the Plan's LIO 

form of benefit is $1,371.02 before age 62 and $595.47 after age 62, where $1 ,371.02 = 

$1,665.47 minus $294.45. Enclosure 2 is your Corrected Benefit Statement. 

5. 	 Recoupment of Your Total Overpayment 

As we explained above, Congress has set limitations on the benefits that are 

payable from a plan's trust fund when a plan terminates. The legal limitations become 

effective on the plan's termination date. Once PBGC became trustee of the Plan on 

February 1, 2005, PBGC became responsible not only for making up any 

underpayments to FA Plan participants that occurred before and after PBGC became 

trustee, but also for collecting any overpayments made by the Plan before and after 

PBGC became trustee. Regardless of the cause of your overpayments (in this case, an 

inaccurate estimate of your guaranteed benefit), it is clear that you have received 

payments that are higher than your guaranteed benefit amounts. 

Although PBGC could ask for repayment in a single payment with interest, 

PBGC's regulations3 provide for the recoupment of previous overpayments through 

small reductions in PBGC's benefit payments. The regulations generally limit the 

reductions to no more than ten percent of the final PBGC monthly benefits. If you die 

before PBGC has collected your total overpayment amount, PBGC will not seek any 

repayment from your estate or your heirs. Finally, PBGC does not charge any interest 

on the overpayments. All of these limitations on PBGC's recoupment of overpayments 

are designed to mitigate the potential hardship on PBGC's retired participants resulting 

from the need to repay large overpayment amounts. 

While we regret any hardship that the recoupment reduction may cause, 

Congress has not authorized PBGC to pay you bene·flts that are larger than the benefits 

payable to you under the terms of the Plan and the provisions of ERISA. 

Decision 

Having applied the terms of the FA Plan and the law to the facts in this case, the 

Appeals Board· changed PBGC's determination by increasing your PBGC benefits. The 

table on the first page of this decision letter summarizes the Board's changes. This 

decision is PBGC's final action regarding the issues raised by your appeal. If you wish, 

you may seek review of this decision in an appropriate federal district court. 

2 	 PBGC's regulation (29 Code of Federal Regulations§ 4022.21(b)) provides an explicit exception 

to the Accrued-at-Normal-Retirement limit for "early-retirement supplements" that result from a 

participant's election of a LIO form of benefit if the LIO form is the actuarial equivalent of the 

plan's SLA form of benefit. 

3 	 29 Code of Federal Regulations§ 4022.81. 
'"' \) '


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We regret the delay in responding to your appeal and appreciate your patience 

while we completed our review. If you need other information about your PBGC benefit, 

you may call PBGC's Customer Contact Center at 1-800-400-7242 and ask to speak to 

the authorized representative assigned to the FA Plan (Case 203572). 

Sincerely, 

Michel Louis 

Appeals Board Member