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ii PBOC Pension Benefit Guaranty Corporation 

il rrr~~~rc.ml200 K Street, N.W., Washington, D.C. 20005-4026 

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8. 

November 18, 2002 

ii I 

It 

Re: Appeal 71 

Pan American World Airwavs. -. Inc. ('>Pan Am") 

Cooperative Retirement Income Plan (the "Plan") 

The Appeals Board has reviewed your July 30, 1999 letter which 

submits new evidence and asks that the Appeals Board to re-open 

your appeal. Your letter was in response to my June 30, 1999 

letter which closed your appeal but stated that PBGC will always 

consider any new, specific evidence that you present showing that 

you may be entitled to a different benefit. 

As explained below, the Appeals Board affirms PBGC's 

determination that your Plan benefit is $264.90, payable monthly as 

a Straight Life Annuity. In particular, the Board finds that: (1) 

the earnings data that you submitted does not show that you are 

entitled to a larger benefit under the Plan, and (2) PBGC and Pan 

Am correctly based your benefit on your service and Compensation 

determined as of CRIP's December 31, 1983 freeze date. 

1. Your Request for Plan Documents and a CODY of Your Benefit File 

You state in Schedule A to your July 30 letter, "PBGC has 

denied me access to documents and records" you requested in your 

initial appeal letter. In my June 30 letter, however, I included 

all the data that PBGC used to calculate your benefit. In 

addition, on August 18, 1999, PBGC's Disclosure Officer sent you 

the following materials: (1) the records in your benefits file; 

(2) the CRIP plan documents in effect when CRIP was terminated on 

July 31, 1991; and (3) the most current Summary Plan Description 

prepared by Pan Am for flight attendant employees. You have not 

identified, nor has the Board been able to locate, any information 

in any of those materials that indicates your benefit was 

calculated incorrectly. But, as stated in my June 30 letter, if 

you locate any specific information in those documents or elsewhere 

that shows that you are entitled to a different benefit, PBGC will 

consider that evidence even though your appeal has been decided. 

2. The Allesed Conflict Between PBGC's Roles as Statutow Trustee 

and Guarantor 

You also assert that my June 30 letter is based on "fallacious 

reasoning'and self-serving decisions made with inherent Conflicts 

of Interest with its role as Trustee of the Plan." The Appeals 

Board has previously addressed that issue, and a summary of its 
D decision on that and other issues is included as Enclosure 2 to my 

I 

1. June 30 letter.' As the Board describes in that Enclosure 2 (at ). pg. -2 the issue whether PBGC's two roles as statutory trustee 

Il I of CRIP and as government guarantor of the CRIP benefits create an 

$8 inherent and improper conflict of interest has been raised in the 

Pineiro v. PBGC lawsuit. In its November 1997 opinion in that 

case, the Court ruled that PBGC's dual role cannot be inherently 

fatal. Relying upon the Court'e decision, the Appeals Board has 

previously concluded that there is no conflict of interest when it 

decided CRIP participants' appeals. 

While the Court's decision should resolve the "inherent 

conflict" issue, the Pineiro lawsuit remains pending. PBGC has 

repeatedly stated that if a final decision is issued in that case 

that results in an increase in benefits for any CRIP participant, 

PBGC will apply the decision to all similarly-situated 

participants, including participants like yourself for whom the 

f 

appeals process has been completed. 

You also state that PBGC "improperly and incorrectly" decided 

that Pan Am had validly adopted an amendment freezing CRIP benefits 

and accruals as of December 31, 1983. The Appeals Board has looked 

carefully at this issue, and a summary of the Board's decision is 

included in at pg. 2-3 of Enclosure 2 to my June 30, 1999 letter. 

In short, the Board has decided that Pan Am followed all necessary 

legal steps in adopting the amendment freezing CRIP. Your 

statement to the contrary does not provide any specific information 

that would cause the Board to reconsider that decision. We are 

enclosing a copy of CRIP's freeze amendment. See Enclosure 6. If 

you need copies of any additional documents please contact, PBGC's 

Disclosure Officer at 1200 K Street, N.W., Washington, DC 20005. 

You may also contact the Disclosure Officer at (800) 400-7242 

extension 4040. 

4. Your Earninqs Data 

In your July 30 letter you state that PBGC used the wrong data 

to determine your benefit, and you enclosed a report of the 

earnings reported for you to the Social ~ecurit~ Administration 

(your 'Social Security Earnings") for the years 1967 through 1991. 

However, your 1984-1991 Social Security Earnings do not provide 

grounds for changing your benefit because, as explained above, 

Compensation under the Plan was frozen effective on December 31, 

1983. I explain in the following two paragraphs why your Social 

A copy of my entire June 30, 1999 letter and its enclosures 

is included as Enclosure 1 to this letter. 
Security data for the remaining years, 1967 through 1983, also do 

not provide grounds for changing PBGC's determination. 

Your Social Security Earnings 1979 through 1983 

Pan Am's record of your Compensation (also called "Actual 

Compensation") and your Annualized Compensation, which are for the 

years 1979 through 1983 only, and the Social Security Earnings you 

submitted for those years are shown in the table below. 

Your Social Security Earnings are not directly comparable to Actual 

or Annualized Compensation in years after 1978 because: 

Social Security Earnings include overtime and bonuses, while 

the Plan's definition of Compensation for participants in the 

IUFA Workforce does not include overtime or bonuses in years 

after 1978. (See page 8 of my June 30, 1999 letter.) 

Furthermore, the Appeals Board has reconciled the Compensation data 

in the table above that PBGC and Pan Am used to determine your 

benefit with all available sources, including your Social Security 

Earnings, and a detailed hourly wage rate history contained in 

computerized Pan Am databases. See the Appendix and Enclosures 2 

and 3 to this letter). The Board concluded that your 1979-1983 

Social Security Earnings are consistent with the Plan's records of 

your pension earnings and provide no basis for changing PBGC's 

determination. 

Your Social Security Earnings for 1967 through 1978 

Earnings in years before 1979 could affect your benefit under 

either of CRIP's two earnings-based benefit calculation formulas 

applicable to your job class: the Monthly Updated Benefit and the 

Monthly Basic Benefit. (See pages 8 and 9 of my June 30 letter.) 

Also, Pan Am records do not contain earnings figures for you for 

years before 1979. The Appeals Board staff have therefore used the 

Social Security Earnings data that you provided to recalculate your 

benefit under the Monthly Updated and Basic Benefit formulas. The 

Appendix and Enclosures 5a and 5b to this letter show that your 

benefit is not improved using the new data from the Social Security 
Administration 

finds no basis 

-4- 

that you provided. The Appeals 

for changing PBGC's determination. b. 

ii 5. Reauest for Delav in Decidins Your Ap~eal 

I 

$0 You enclosed with your July 30, 1999 letter a 

Board therefore 

request that the 

Appeals Board delay coniideratibn of your appeal untii 45 days from 

the date that you obtain your salary and earnings records from the 

Social Security Administration and the Internal Revenue Service. 

As noted above, you have already provided, and the Appeals Board 

has reviewed, your Social Security Earnings for all relevant years. 

The Appeals Board concludes it is inappropriate to delay PBGC's 

final determination of your benefit because, as explained in the 

Appendix to this letter, it ia highly unlikely that any information 

exists that would change PBGC' a determination of your CRIP benefit. 

Furthermore, you will not be harmed by the Board deciding your 

appeal now because the PBGC will always - even after an appeal is 

closed - consider any new. specific evidence that you present 

showing that you may be entitled to a different benefit. 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 

Having applied the law, the regulations, and the provisions of 

the Plan to the facts in this case, the Appeals Board finds no 

basis for changing the PBGC's initial determination and affirms 

that your pension benefit under CRIP is $264.90, payable monthly as 

a Straight Life Annuity. This letter concludes your administrative 

remedies. You may, if you wish, seek court review of this 

decision. We appreciate your patience during this careful review of 

your appeal. 

Sincerely, 

William D. Ellis 

Appeals Board Member 

Appendix: ~nalysis of your Compensation data 
Enclosures: 

1) 

cc: 1 

Copy of my letter to you dated March 31, 1999 (13 pages 

plus 15 pages of enclosures) 

Wage data taken from Pan Am's "Historical File" database 

for you 

Worksheet reconciling your wage history (Enclosure 2) with 

Pan Am's & PBGC's records of your Compensation and 

Annualized Compensation 

Overview of the calculations in Enclosure 3a (2 pages) 

Excerpts from a Pan Am Administrative Manual titled 

"Pension Administration Data Base'' 12 pages) 

Worksheet calculating your Monthly Basic "Career Average" 

Benefit using the Social Security Earnings you provided 

the Appeals Board 

Worksheet calculating your Monthly Updated Benefit using 

the Social Security Earnings you provided the Appeals 

Board 

Copy of CRIP's 1984-1 amendment, signed August 10, 1984 

7 

(6 pages)