PEG= Pension Benefit Guaranty Corporation 

7 

ULG~HNMUIIIGENC( 1200 K Street, N.W., Washington, D.C. 20005-4026 

December 23, 2002 

Re: Appeal 71 

Pan American World Airways, Inc. ("Pan Am") 

Cooperative Retirement Income Pension Plan (TRIP") 

Dear 71 

We are responding to your appeal of PBGC's September 22' 1998 

determination that you are entitled to receive $483.55 per month, 

the same as PBGC has been paying you since January 1, 1996. Your 

benefit is a Straight Life Annuity. As explained below, you have 

not presented a basis for changing PBGC's determination. 

Your Appeal 

In your October 19, 1998 letter, you stated: 

You feel that because of your 29 years of service and the fact 

that the retirement fund was frozen you should be eligible to 

receive your full benefit either from the sale of Pan Am 

properties or from the U.S. Government, 

0 You worked for 29 years and 19 days and should be receiving 

approximately $1,500.00 a month, and 

0 You questioned what happened to the funds received from the 

sale of the Pan Am Worldport terminal. 

We explain your benefit calculation below. See pages 2 and 3 for 

an explanation of how CRIP's assets affect your benefit. 

You also stated you believe some former Pan Am employees 

worked until age 52 and are now "receiving their full pension, " and 

that you are receiving only one third of your pension. Please be 

advised CRIP uses complicated rules to distinguish between 

participants even if they had equal pay rates and equal total 

employment periods. Also, participants' benefits may vary if they 

choose different benefit forms or retirement dates. 

Appeals Board Decisions Relevant to Your A~peal 

In prior decisions the Appeals Board: 

found that CRIP's definition of Compensation includes overtime 

and bonuses for participants in Pan Am' s Management Workforce; 

0 decided that a CRIP amendment freezing compensation and 

service as of December 31, 1983; 
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L decided that PBGC may pay CRIP's subsidized Early Retirement 

a Benefit only if the conditions for that benefit were met as of Y 

I July 31, 1991, CRIP's termination date. Thus, a participant L 

c could qualify for the subsidized benefit only if (among other I) 

< 

I conditions) as of that date he had been employed by Pan Am 

a within 10 years of his Normal Retirement Date. 

found that CRIP's administrators and PBGC correctly used the 

factors in the "45.2% Table" to adjust Vested Separation 

benefits such as yours for starting early even though these 

factors are more generous than the CRIP document states. 

These decisions are explained in Enclosure 2. 

Data Relevant to vour A~weal 

PBGC's files contain the following data relevant to your 

appeal and to your Pan Am employment: 

(1) 1 Your date of birth: 171 

11 (2) 1 Your hire date: 1 10/12/1962 11 

(3) 

(10) 1 Your Normal Retirement Date: 1 1/01/2006 1 

(4) 

(5) 

(6) 

(7) 

(8) 

(9) 

Your Pension Service 

Effective date on which CRIP's benefit 

accruals were 'frozen" : 

The 21 2/12 Years of Benefit Service PBGC used is the full 

elapsed time in complete calendar months from your October 12, 1962 

hire date through CRIP's December 31, 1983 freeze. 

12/31/1983 

Your final 5-year Average Annualized 

Compensation as of 12/31/83: 

Your total Years of Benefit Service as of 

12/31/83: 

CRIP's termination date: 

Date your employment ended: 

Date you started receiving your benefits: 

Your age on 1/01/1996, in years and completed 

months: 

Affect of CRIP's Assets on Your Benefit 

$36.317.74 

21 years 

2 months 

7/31/1991 

10/31/1991 

1/01/1996 

55 years 

0 months 

We explain below, PBGC is paying your full CRIP benefit. 

Under the law, PBGC may not pay you more than CRZP provides. 

Also, CRIP's assets, including the assets PBGC recovered by selling 
the Pan Am Worldport Terminal, provide approximately $700 million 

less than the CRIP benefits PBGC is paying. Therefore, Pan Am's 

funding does not affect the benefit that PBGC is paying you. 

PBGC must apply CRIP's requirement that service and 

compensation accruals be frozen as of December 31, 1983. ERISA' 

and the Internal Revenue Code allow pension plans to be frozen and 

remain ongoing. However, except in a case of "temporary 

substantial business hardship, "' the Internal Revenue Code requires 

a plan's sponsor to make minimum funding contributions even if the 

plan is frozen. 

Your Benefit Amount 

Application of the Appeals Board's decisions to the facts in 

your case, as explained below, shows your benefit is $483.55 per 

month. Your Normal Retirement Benefit is the largest of your: 

Alternative I: Monthly Basic Benefit, 

Alternative 11: Monthly Minimum Benefit, or 

Alternative 111: Monthly Updated Benefit. 

1. Your Pension Earnings 

The middle two columns of the table below show your pension 

earnings, as contained in Pan Am's pension records and used by PBGC 

to compute your benefit. The column at the far right shows your 

earnings for certain years, as reflected in Pan Am's payroll 

records. 

Pan Am Electronic Records 

Pension Earninqs 

I Annualized 

Year 1 Compensation 1 Compensation I Payroll Earnings 11 1979 1 $31,325.13 1 $31,325.13 1 unavailable 

Total : ) $181,588.72 1 

Averaqe: 1 $36,317.74 1 R 

1981 

1982 

1983 

Employee Retirement Income Security Act of 1974, as amended 

IRC section 412(c) (12) 

$38,056.26 

$40,006.52 

$36,094.72 

$38,056.26 

$40,006.52 

$36,143.97 

$36,817.38 

unavailable 

$36,094.72 
For members of Pan Am's Management Workforce, the Appeals 

Board has used payroll data to increase a participant's pension 

earnings if that data showed higher earnings and if there was no 

reason to believe that the payroll data included items that must be 

excluded from pension earnings. But in your case, as you can see 

from the table, using the payroll data (for the years for which it 

is available) would not increase your pension earnings. Therefore, 

based on the records available, it does not appear that any 

overtime or bonuses you may have earned was excluded from Pan Am's 

records of your pension earnings. 

2. Alternative I: Monthly Basic Benefit (also called the "Career 

Average Formula" for the Management Workforce) 

Your Monthly Basic Benefit is the sum of the following: 

1) For each year or fraction of a year before 1979, 1% 

of your Compensation up to $3,000, plus 2% of your 

Compensation over $3,000. 

2) For each year or fraction of a year starting in 

1979 [through the December 31, 1983 freeze date], 

1.25% of your Compensation up to $4,000 plus 2% of 

your Compensation over $4,000. 

Effect of pre-1979 Compensation on Your Monthly Basic Benefit 

CRIP's administrators calculated you earned a Monthly Basic 

Benefit of $419.07 ($5,028.79 t 12 months), if paid as a Straight 

Life Annuity starting at age 65. PBGC cannot reproduce the $419.07 

calculation because PBGC could not obtain your pre-1979 pension 

earnings. However, the Appeals Board has verified it is highly 

unlikelv exact pre-1979 earnings would improve the benefit of 

participants in your situation. You needed pre-1979 overtime and 

bonus earnings averaging more than approximately 64% of your 

estimated based pay to improve your PBGC benefit under the Monthly 

Basic Benefit. See Enclosure 4. 

3. Alternative 11: Monthly Minimum Benefit 

Your Monthly Minimum Benefit is calculated by multiplying your 

21-2/12 Years of Benefit Service by the applicable benefit accrual 

rate for your job classification. Pan Am's pension records show 

you completed allof your service in jobs classified under the 

$24.00 benefit accrual rate. Therefore, your Monthly Minimum 

Benefit is $508.00 (21 2/12 years x $24.00}, if paid as a Straight 

Life Annuity starting at age 65. 

4. Alternative 111: Monthly Updated Benefit 

Your Monthly Updated Benefit depends on your Average 

Annualized Compensation (AAC) for each of the six 5-year periods 
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w ending on December 31, of 1978, 1979, 1980, 1981, 1982, and 1983. 3 a 

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Your benefit is largest using your 1979-1983 AX. See Enclosure 5 L. 

!- which shows the pre-1979 earnings you would need to increase your 

4 Monthly Updated Benefit. I 

u Updated Benefit Calculation Using 1979 - 1983 Compensation 

Your accrued Monthly Updated Benefit based on your 1979-1983 

AAC is calculated by multiplying your $36,317.74 AAC by your 21- 

2/12 Years of Benefit Service, then multiplying by 1.67%. Thus, 

your accrued Monthly Updated Benefit is $12,837.72 per year 

($36,317.74 x 21-2/12 years x .0167}, or $1,069.81 per month 

($12,837.72 s 12 months), if paid as a Straight Life Annuity 

starting at age 65. 

Effect of Pre-1979 Compensation on Your Monthly Updated Benefit 

Your benefit would improve only if your pre-1979 Average 

Annualized Compensation, excluding overtime and bonuses, is larger 

than shown in any row of the table'below. 

For comparison, your 1979 Annualized Compensation was 

$31,325.13. Therefore, it is unlikely your pre-1979 Annualized 

Compensation exceeded the $34,863.46 needed. 

5. Your Normal Retirement Benefit 

Your Normal Retirement Benefit is $1,069.81 per month under 

the Monthly Updated Benefit. This amount is larger than your 

$508.00 Monthly Minimum Benefit, and your $419.07 Monthly Basic 

Benefit. 

' CRIP documents also include an earlier version of the 

Monthly Updated Benefit which produces a smaller benefit. The 

earlier version uses a 1.5% accrual rate instead of 1.67% and is 

also reduced based on your Social Security benefit. See Enclosure 

6 page A-3. 
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6. Reduction for Starting Your Benefit Early 

5 To qualify for the subsidized Early Retirement Benefit, CRIP " 

r requires working for Pan Am within 10 years of the Normal 

5 Retirement Date, which for you is at age 65. This CRIP requirement I applies regardless of whether your employment ended voluntarily or 

involuntarily. Because you had not reached age 55 when your 

employment ended October 31.. 1991, PBGC is unable to pay you 

CRIP's subsidized Early Retirement Benefit. 

Under CRIP's Vested Separation Benefit, your benefit must be 

reduced for starting early using the factors in CRIP's 45.2% Table. 

The applicable factor for a participant such as you who began 

receiving benefits at age 55 years 0 months is .4520. See 

Enclosure 3. Therefore, your benefit is $483.55 ($1,069.81 x 

.4520) per month. 

Where to Submit Anv New Evidence 

PBGC will always - even after an appeal is closed - consider 

any new, s~ecific evidence you present showing you may be entitled 

to a different benefit. As explained above, you may be entitled to 

a larger benefit if your earnings including overtime and bonuses 

averaged more than shown in any row of the table on page 5. Please 

send any such information to: 

PBGC Authorized Plan Representative 

1175 Peachtree Street, N.E. 

100 Colony Square, Suite 500 

Atlanta, GA 30361 

You may also contact PBGC's Authorized Plan Representative at 1- 

800-400-7242 extension 2000. 

Decision 

Given the Appeals Board's decisions on appeals which have 

raised the same issues you have raised, you have not presented a 

basis for changing PBGC's determination. This letter concludes 

your administrative remedies with respect to PBGC's September 22, 

1998 determination. You may, if you wish, seek court review of 

PBGC's determination with respect to the issues you have raised. 

We appreciate your patience during this careful review of your 

appeal. 

Sincerely, 

&2u. &- 

William D. Ellis 

Appeals Board Member 

Enclosures: 
1) Pan Am's "Personnel Master" database record for you 

2) Explanation of Certain Appeals Board Rulings Involving 

the Pan Am 'CRIP Plan" (7 pages) 

3) Summary of CRIP's provisions (2 pages) 

4) Worksheet showing an average 64% overtime plus your 

estimated full-time pay is needed before 1979 to produce 

a Monthly Basic ("Career Average") Benefit that exceeds 

your Monthly Updated Benefit 

5) Complete Calculation of CRIP's Monthly Updated Benefit. 

6) CRIP document, Section I, Appendix A (4 pages)