'*V(\ PBGC. Pension Benefit Guaranty Corporation 

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

www.pbgc.gov 

November 26, 2010 

R~: Appeal Case Number 207148 

Republic Storage Systems Company Pension Plan for 

Non-Bargaining Employees (the "Salaried Plan") 

Appeal Case Number 207149 

Republic Storage Systems Company Pension Plan for 

Bargaining Employees (the "Hourly Plan") 

near 

We are responding to your appeal of PBGC's determinations of 

PBGC benefits under the Salaried Plan and the Hourly '-=.-----------:::::---~~ Plan. For the reasons stated below, we are partially granting your 

appeal. We are increasing PBGC benefit as follows: 

PBGC-Payable Benefits Before Reducing for Overpayments 

Hourly Plan Salarie¢1 Plan Total Both Plans 

Appeals Appeals Appeals 

Period PBGC Board PBGC Board PBGC Board 

6/01/2006 

- 1/01/2016 $1,095.21 $1,095.21 $193 .11 $372.30 $1,288.32 $1,467.51 

2/01/2016 

- 1/01/2019 $1,095.21 $1,095.21 $193 .11 $193.11 $1,288.32 $1,288.32 

2/01/2019 

& thereafter $1,095.21 $1,095.21 $164.46 $164.46 $1,259.67 $1,259.67 

Benefits Plan Officials Determined 

retired under a 30-Year Retirement effective 

July 1, 2005 with a permanent pension totaling $1,259.67 

{$1,452.17 1 accrued- $192.50 LTV 2 } per month. Administrators at 

1 $3,950.36 earnings x 30 years {including LTV service} x 1.167% + 5% 

2 $192.50 is the accrued benefit under the LTV Hourly Plan on 6/16/1986. 

The LTV Hourly Plan (the "LTV Plan") is successor to the Pension Plan of 

Republic Steel Corporation. See Enclosure 2 to this letter. 
2 


Republic Storage Systems Co. (the "Company") divided the $1,259.67 

total as follows: 

• 	 $164.46 3 under the Salaried Plan, plus 

• 	 $1,095.21 4 under the Hourly Plan. 

Moreover, Plan actuaries found she was entitled to a $455.81 5 

per month temporary amount under the Salaried Plan, payable until 

age 65. Thus, when the Plans) terminated in May 2006, she was 

receiving a total of $1,715.48 6 per month. 

permanent Company-sponsored pensions, totaling 

$1,259.67, and temporary amount, $455.81, are payable as single 

life annuities with no survivor benefits. She is also entitled to 

a separate Surviving Spouse's Benefit under each plan. 

PBGC's February 2, 2010 Determination Letters 

- PBGC determined almost the same plan-provided benefits, 

totaling $1,715.11, 7 instead__ of $1,715.48, including a $455.44 8 

pre-age 65 temporary amount. However·, PBGC also determined that 

PBGC may pay only $28.65 of the temporary amount. Thus, PBGC 

determined! !pension amounts as follows: 

I 3 $1,259.67 net accrued at Republic Storage x 13.056% salaried service. 

Plan actuaries and PBGC divided the same $1,259.67 total slightly 

differently. See Enclosure 1 to this letter. For simplicity, in this letter we 

discuss only PBGC's version of the division. 

4 	 $1,259.67 total earned at Republic Storage x 86.944% hourly service. 

5 	 $1,715.48 initial amount- $1,259.67 total permanent pensions 

6 	 $3,950.36 earnings x 30 years x 1.5333% + 5%- $192.50 LTV 

$1,095.21 Hourly Plan permanent 'pension 

+ $164.46 Salaried Plan permanent pension 

+ $455.81 Salaried Plan temporary amount payable to age 65. 

A reduction for 50% of the Social Security benefit (50% x $1,437.00) does 

not apply under this "1. 5%'; formula until she reaches age 65. Afterward, her 

benefit becomes larger ($1,259.67) under another formula. See page 1. 

7 $3,950.36 earnings x 30 years x 1.533% + 5% - $192.50 LTV 

Plan actuaries mistakenly used a 1.5333% accrual rate ins~ead of 1.533%. 

Compare footnote 6 with Enclosure 3 page 9 Plan section 3.1(b) (1). 

8 $1,715.11 initial amount- $1,259.67 total permanent pensions 
3 


Benefits PBGC Determined - Before Reducing for Overpayments 


Hourly Plan Salaried Plan · Total Both Plans 

Period 

Full Plan 

Benefit 

PBGC 

Payable 

Full Plan 

Benefit 

PBGC 

Payable 

\ 

Full Plan 

Benefits 

PBGC 

Payable 

- 6/01/2006 

1/01/2019 $1,095.21 $1,095.21 $619.90 $193. 11 $1,715.11 $1,288.32 

2/01/2019 

(age 65 & 

thereafter) 

$1,095.21 -$1,095.21 $164.46 

\ 

$164.46 $1,259. 6·7 $1,259.67 

PBGC is also guaranteeing a Surviving Spouse's Benefit under. 

each Plan. Becaus~ has continued to receive $1,715.48 as 

her total estimated guaranteed benefits~ PBGC determined: 

• She was overpaid $18,367.88 9 through April 1, 2010 . 

.; Her PBGC benefits must be temporarily reduced at most 10% to 

"recoup" her overpayments. 

Your March 8, 2010 Appeal of PBGC's Determinations 

You ar·gued PBGC should not reduce $1,715.48 

payments. You gave the following reasons: 

• She earned the $1,715.48 amount she was receiving. 

• She has relied on PBGC ;r-epresentations· that she would 

receive the $1,715.48 amount for the remainder of her life. 

• Reducing her payments will cause financial hardship, likely 

leading to bankruptcy. 

Legal Limits Apply Due to Plan Underfunding 

Both the Salaried Plan and the Hourly Plan terminated May 11, 

2006, without assets sufficient to provide all benefits. The 

Salaried Plan was only 55%-funded 10 and was unde'rfunded by more 

than $7.8 million. 11 Consequently, under ERISA, 12 PBGC became the 

statutory trustee of each plan. Further, under ERISA: 

9 ($1,715.48- $1,28B.32) x Dmonths c=]2006 through c::::::::J2010 

Her overpayments will be recalculated consistent with the new PBGC benefits 

decided here. PBGC is "recouping" only overpayments following the September 22, 

2006 date of the Notice of Determination on which the Plans' terminations were 

based. See 29 CFR 4022.81(c) (1). Recoupment is explained starting on page 7 

below. 

10 $9,421,724 Salaried Plan assets 7 $17,253,958 benefit liabilities 

11 $17,253,958 benefit liabilities- $9,421,724 Salaried Plan assets 

12 The Employee Retirement Income Security Act of 1974, as amended. 
4 


• PBGC guarantees benefits as provided in a plan or otherwise 

required by ERISA, subject to legal limits given in law and 

regulation. 13 

• PBGC also allocates toward benefits a terminated plan's I. assets and expected legal recoveries. 14

Discussion 

No Evidence that $1,715.48 Was Represented as Permanent 

Your appeal asserts PBGC has represented to that 

she would continue to receive $1,715.48 every month during her 

lifetime. You have provided no evidence, however, to support that 

assertion. We found to the contrary: 

• When she retired in 2005, plan administr'ators determined 

that at age 65, her total benefits would be reduced to 

$1,259.67, the same total that PBGC will pay. 15 

• After the plans terminated in 2006, · PBGC continued her 

$1,715.48 total payments as her estimated PBGC benefits, while 

her final benefits were bei~g determined. Neither have you 

provided nor have we seen any evidence that PBGC ever stated 

the $1,715.48 estimated total would become permanent. 

Therefore, we cannot agree with your assertion that PBGC (or 

Company officials) ever advised that her $1,715.48 

payments would I be permanent.

Salaried Plan Requires Reducing at Age'~ 65 

In any event, PBGC still may guarantee and allocate assets 

only to benefits that are actually provided by a pension plan. 16 

13 PBGC guarantees benefits under ERISA sections·4022(a)-(b). 

14 Plan assets are allocated under ERISA section 4044. Expected legal 

recoveries are allocated under ERISA sections 4022(c) and 4044. 

15 Plan administrators determination of the $1,259.67 age-65 total is shown 

in Enclosure 1. PBGC's $1,259.67 age-65 total is shown in our summary table onpage 3 above. 

16 For guaranteed benefits, see ERISA section 4022 (a), and section 

4001(a) (8) for the definition of a "non-forfeitable" benefit. The requirements 

for allocating assets only to a plan's benefits are given in ERISA section 

4044 (a). 
5 


The Salaried Plan discontinues her temporary amount at age 65. 17 

Thus, we must affirm PBGC' s determination that her total Planprovided benefit (before adjusting for her overpayments) is 

$1,259.67 per month at age 65. 

We Reviewed PBGC's Guaranty of the Temporary Amount 

PBGC determined lower PBGC-payable benefits than Company 

officials determined only for the period before age 65, and only 

under the Salaried Plan. See the table on page 3 above. Thus, we 

discuss next what portion PBGC may pay' of the Salaried Plan's 

($455.44) pre-age 65 temporary amount. 

"Accrued-At-Normal-Limit" Equal to Age-65 Benefit Amount 

PBGC generally may guarantee only old-age retirement benefits 

instead of temporary amounts that a plan stops before Normal 

Retirement Age. Thus, PBGC's regulation generally limits a 

guaranteed benefit to the amount of a normal retirement benefit if 

paid as a Straight Life Annuity. 18 This limit is often called the 

Accrued-at-Normal Limit (the "AAN Limit"). The Hourly Plan and 

Salaried Plan define the Normal Retirement Age as 65. Thus, c::::::::J 

AAN Limit is her age-65 pension amount. L_______j 

PBGC Limited by Age-65 Amount already Reduced by LTV Benefit 

PBGC determined I I AAN Limit to be her combined 

$1,259.67 age-65 beneflt under the Hourly and Salaried Plans. The 

$1,259. 67 19 limit that PBGC used is the net benefit under the 

Hourly and Salaried Plans after the offset for the accrued benefit 

under LTV Plan ($192.50 ) has been applied. 20 

RTI Plan Precedent for not Reducing AAN Limit for LTV Benefit 

·The Appeals Board has previously decided an appeal that 

questioned the Limit for a pension plan like the pensions in 

17 Her plan-provided benefits change·from the "1.5% pension" to the "1.1 

pension" at age 65. Under section 3.1(b) (1), her 1.5% pension totals $1,715.11: 

$3,950.36 earnings x 30 years x 1.533% +'5% 

. $192.50 accrued benefit under the LTV Hourly Plan on 6/16/1986 

At age 65; the $1,715.11 amount must be reduced by 50% of her Social 

Security benefit (50% x $1,437.00), under Salaried Plan section 3.5(b) (2) in 

Enclosure 3. Her benefit under the "1.1% pension" then becomes largest: 

$1,259.67. 

18 See 29 CFR section 4022.21 (a) (1) . Certain exceptions, for example for 

certain disability benefits, do not apply tal !benefit. 

19 $1,452.17 accrued- $192.50 LTV Plan 

20 See the calculations in )footnotes 1 and 2 on page 1, 
6 

the Salaried Plan and. the Hourly Plan. Under the RTI Plan 21 the 

Appeals Board found: 

. "In some pension plans, such as the RTI Plan, the 

participant's accrued benefit is based on his combined 

service with two employers with an offset for the benefit 

payable under the second employer's pension plan. Also, 

sometimes the benefit payable under the second employer's 

pension plan has a different start date. PBGC has 

developed an actuarial procedure for applying. the 

Accrued-at-Normal limit in such situations." 22 

The Appeals Board decided on the RTI Appeal: 

• 	 PBGC' s procedures require calculating a combined-plan Accruedat-Normal-Limit equal to the total accrued benefit before 

reducing for a deferred LTV benefit, and 

• 	 PBGC already followed such a procedure on the RTI Plan. 

AAN Limit Equals $1,452.17 Including LTV Benefit 

Applying the RTI Plan precedent, we are combining Ms. Harris's 

AAN Limits under the Hourly Plan, the Salaried Plan, and the LTV 

Plan. Her LTV Plan AAN Limit is $192.50. 23 Also, 'her combined AAN 

Limits under the Hourly Plan and the Salaried is $1,259.67. Thus, 

her c:::;ombined Accrued-At-Normal Limit under the three plans is 

$1,452.17. 

Her $1,452.17 combined AAN Limit is less than the $1, 715.. 11 

total that the Hourly Plan and the Salaried Plan together provide 

her before age 62, when her LTV Plan accrued benefit first becomes 

payable in an unreduced amount. Thus, her guaranteed benefits as 

affected by the combined AAN Limit become: 

21 The 	Republic Technologies International LLC-USWA Defined Benefit Plan. 

22 The 	Appeals Board's decision· under the RTI Plan is dated April 16, 2009. 

A redacted version is posted on PBGC's web site. See page ~ of the decision: 

http://www.pbgc.gov/apbletters/Decision--Republic%20Technologies%20IntlUSWA%202009-04-16.pdf. 

23 The LTV Plan, like the Hourly Plan and Salaried Plan, defines the Normal 

Retirement Age as 65. LTV Plan accrued benefit ($192.50) was 

determined by PBGC on March 23, 2005. Her earliest "unreduced retirement date" 

is 2016, as noted on the Benefit Statement with PBGC's LTV Plan 

determination. See Enclosure 2 to this letter. did not appeal PBGC' s 

determination under the LTV Plan. She may choose to receive an a.ctuarially 

reduced LTV Plan amount eariier than at age 62 without affecting her guaranteed 

Salaried Plan and Hourly Plan benefits. 
7 

Guaranteed Accrued Benefits 24 based on the Combined AAN Limit 

Period Hourly Plan Salaried Plan LTV Plan Total 

6/01/2006 - 1/01/2016 

(until age 62) $1,095.21 $356.96 $0.00 $1,452.17 

2/01/2016 - 1/01/2019 

(starting at age 62) $1,095.21 $164.46 $192.50 $1,452.17 

2/01/2019 & thereafter 

(starting at age 65) $1,095.21 $164.46 $192.50 $1,452.17 

Legal Recoveries Allocated to Unfunded Non-Guaranteed Benefits 

25 Expected legal recoveries fund 3.50% of the Salaried Plan 

benefits that otherwise are neither funded by plan assets nor 

guaranteed. Under complicated rules, recoveries fund 6.917% of the 

amount by which her Salaried Plan benefit under 5-year old plan 

provisions ($578.67 26 ) exceeds her guaranteed benefits ($356.96 and 

$164.46) . Thus, we are changing the PBGC-payable amounts that PBGC 

determined to the following: 

Guaranteed Benefits Plus Benefits Funded by Expected Legal Recoveries 

I Period Hourly Plan Salaried·Plan I Total 

6/01/2006 - 1/01/2016 $1,095.21 $372.30 $1,467.51 27 

2/01/2016 - 1/01/2019 $1,095.21 $193 .11 $1,288.32 28 

2/01/2019 & thereafter $1,095.21 $164.46 $1,259.67 29 

I I I 

24 Our increase to AAN Limit does not trigger other legal 

limits on PBGC's guaranty. A $41.23 benefit increase by a plan amendment, from 

$578.67 to $619.90 (shown on page 3 above), is well below an $80 threshold for 

a limit on such increases under ERISA section 4022 (b) (7). Also, her total 

guaranteed benefit under the three plans, $1,452.17, is well below PBGC's 

$1,575.53 Aggregate Maximum Guaranteed Benefit for age 52 at plan 

termination in 2006. See ERISA sections 4022 (b) (3) and 4022B, and 29 CFR section 

4022.23(c) and section 4022 Appendix D. 

25 $75,355 expected legal recoveries 

7 $2,153,331 benefits that are both unfunded and non-guaranteed 

ERISA sections 4022(c) and 4044(a) (5) apply. 

26 ·$3,722.58 {5-year average earnings} x 30 years x 1.5% + 5%- $192.50 LTV 

- ($3,722.58 x 30 years x 1.133% + 5%- $192.50 LTV) x 86.944% hourly service 

27 $1,452.17 guaranteed+ 6.917% x ($578.67 old plan- $356.96 guaranteed) 

28 $1,259.67 guaranteed+ 6.917% x ($578.67 old plan - $164.46 guaranteed) 

29 The full total plan-provided benefits under the Hourly Plan and Salaried 

Plan at age 65. 
8 


Favorable Recoupment Terms 

To prevent economic hardship, PBGC pays estimated benefits 

while collecting and auditing plan documents and data on all of a 

plan's participants. Unfortunately, becaus~ estimated 

benefits have been too high, she has been overpaid. 

Law and regulation require PBGC to recoup her overpayments. 30 

PBGC's method for recouping overpayments, however, is generally 

advantageous to her: 

(i) PBGC .ls recouping only by temporarily reducing future 

benefit. payments, \ 

(ii) PBGC generally limits to 10% its reductions for 

recoupment, 

(iii) PBGC is not charging interest on her overpayment 

balance, and 

(iv) PBGC will not seek direct repayment of any remaining 

overpayment balance from her or her husband's estates. 

PBGC's Authorized Plan Administrator will contact her about 

adjusting her payments and recalculating her overpayment balance. 

If she has, any questions about her benefit, she may contact PBGC's 

Authorized Plan Administrator at 1-(800)-400-7242. 

Decision 

Having applied Plan provisions and the law and regulations to 

the facts in case, we are partially granting her 

appeal. We are 1ncreas1ng her total PBGC-payable benefits to the 

following amounts: 

PBGC-Payable Benefits 

I Period Hourly Plan Salaried Plan Total 

6/01/2006, - 1/01/2016 $372.30 $1,467.51 

2/01/2016 - 1/01/2019 

$1,095.21 

$193 .11 $1,288.32 

2/01/2019 & thereafter 

$1,095.21 

$1,095.21 $164.46 $1,259.67

I I I I 

The amounts above will be temporarily reduced at most 10% to recoup 

her overpayments. 

PBGC will redetermine Surviving Spouse's Benefit 

under the Salaried Plan consistent .with this decision. Her new 

determination will include a new 45-day right to appeal issues not 

decided in this letter. 

30 See 29 CFR -sections 4022.81 and 4022. 82 (a) (2) (i) . 

( 
9 

This letter concludes administrative remedies 

with respect to PBGC's February 2, 2010 determinations. When her 

new Salaried Plan determination becomes final, she may, if she 

wishes seek court review of this decision with respect to the· 

issues you have raised. We thank you and for your 

patience while we carefully reviewed your appeal. 

Sincerely, 

William D. Ellis 

Appeals Board Member