Pension Benefit Guaranty Corporation 

Protecting America's Pensions 1200 K Street, N.W., Washington, D.C. 20005-4026 

Dear 

May 30, 2008 

Re: Case No: 197610, 

Granite City Pension Plan for Chemical Workers (the 

"Granite City Chemical Plan") 

The Appeals Board has reviewed the appeal you filed on behalf 

of concerning PBGC's January 4, 2006 determination of 

her benefit under the Granite City Chemical Plan. For the reasons 

explained below, we are denying your appeal. 

Benefit Determination and Appeal 

PBGC's letter said that as an alternate payee of 

in a "shared payment" Qualified Domestic Relations 

Order ("QDRO"), is entitled to ~ of the "marital portion" of his 

benefit under the Granite City Chemical Plan. PBGC also enclosed 

a benefit statement showing that is entitled to a lifetime 

benefit of $249.38 per month. 

In your February 7, 2006 appeal, you requested an explanation 

of the percentage (20.4120%) found on line 17 of benefit 

statement ("Percentage Payable to Alternate Payee Under Provisions 

of the QDRO"). You stated that 75% of accrued benefit 

under the Plan was earned during their marriage C- 1973 -

1994), and consequently, when this percentage (.75) is 

multiplied by the "marital portion" as specified in the QDRO (50% 

x 253 7 303;, is entitled to 31.31% of accrued 

benefi t rather than 20.4120%. You did not dispute the other 

information on PBGC's benefit statement. 
Background 

The Grani te City Chemical Plan terminated, effective 

December 6, 2002, without sufficient assets to provide all benefits 

PBGC guarantees under the Employee Retirement Income Security Act 

("ERISA"). The terms of the Plan, the terms of the QDRO, and the 

provisions of ERISA and PBGC regulations and policies determine Ms. 

Pope's entitlement to a guaranteed benefit. Because of legal 

limits under ERISA, the benefits PBGC guarantees may be less than 

the benefits a pension plan would otherwise pay. One of these 

limits, the Maximum Guaranteed Benefit limit, applies to 

benefi t. 

The QDRO 

A domestic relations order was issued by the Circuit Court of 

the Twentieth Judicial Circuit, Monroe County, Illinois on 

2003 ("Order"). It assigned to 50% of the "marital 

portion" of the benefit accrued under the Plan from his 

date of hire through the date of the dissolution of the marriage, 

payable as early as Earliest Retirement Age. The QDRO 

defines the marital portion percentage as "the number of months of 

marriage during which. . benefits were accumulated under the 

Plan prior to the 'Marital Retirement Date' [i.e., March 30, 1994], 

aforesaid (253 [months])" divided by "the total number of months . 

. . benefits were accumulated under the Plan prior to the marital 

retirement date (300 [months]}." Thus, the marital portion 

percentage [253 months -;- 300 months] is 84.3333%, as shown on 

line 5 of benefit statement. On January 24, 2004, PBGC 

determined that the Order satisfied the requirements under ERISA 

and the Internal Revenue Code ("Code") for a Qualified Domestic 

Relations Order. 

PBGC's files show that accrued Plan benefit from 

the date he was hired by Granite City ( 1969) through the 

divorce date ( 1994) is $950.00 per month (line 4 of 

benefit statement). Pursuant to the terms of the QDRO, 

is entitled to ~ of the marital portion of benefit 

as of the divorce date as follows: 

.50 x 84.3333% x $950.00 $400.59 

This is her Plan benefit amount under the QDRO before adjustment 

for benefit form (see line 6 of the benefit statement). Section 4 

of the the QDRO states: "Increased Benefits: Any increases in the 

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Husband's accrued benefits ... caused by contributions occurring 

subeequent to the marital retirement date are not to be construed 

as part of the marita l portion. Accordingly such increases shall 

be disbursed to and enjoyed solely by the Husband and the Wife 

shall not be entitled to share in any such increase." 

The QDRO further provides that shall be treated as a 

survi ving spouse lito the extent of the marital portion of 

accrued benefits for the purpose of provisions requiring 

joint and survivor annuities. II Accordingly, was required 

to elect a benefit form that p rovides a survivor annuity and to 

designate the surviving spouse to the extent of the 

marital portion. 

The Plan's automatic benefit form for a married participant is 

a Joint and 50% Survivor Annuity (50%J&S) with a free Five-Year 

Certain feature. Under this form, a participant's Plan benefit is 

not reduced to reflect the 50%J&S until the end of the five-year 

certain period. This is the reason why the Plan benefit is "nonlevel" with a higher amount payable for the first five years (see 

lines 6 and 8, and lines 9 and 10) 1 

Maximum Guaranteed Benefit (MGB) 

Section 4022(b) (3) of ERISA provides that PBGC's guarantee of 

a participant's plan benefit cannot exceed a specified dollar 

amount payable in the form of a Straight Life Annuity at age 65. 

For plans like Granite City Chemical with a termination date in 

2002, the MGB is $3,579.55 per month in the f orm of a Straight Life 

Annuity for a participant who is age 65 on the Plan termination 

date. Beca~se began receiving his benefit on June 1, 2003 

at age 52.67 and his automatic Plan benefit is in the form of a 

50%J&S with a Five-Year Certain feature, PBGC must adjust the 

$3,579.55 amount to take into account h is age and benefit form. 

This adjusted MGB, levelized to account for the Plan's non-level 

benefit structure, is $1,207.59 per month (see line 12). 

equivalent level straight life Plan benefit as of 

his actual benefit commencement date (June 1, 2003) was $1,771.54 

1 The following sections of this letter show the specific calculations for 

determining guaranteed benefit shown on line 18 for the five-year 

period f ollowing her annuity start date (June 1 , 2003). The same analysis 

applies a fter the end of the five-year period (see line 19) . 
per month (see line 11), which is more than his MGB. Accordingly, 

PBGC determined that it could guarantee only 68.1661% [$1207.59 + 

$1771.54] of his Plan benefit (see lines 14-16). 

Your appeal specifically questioned the "Percentage Payable to 

Alternate Payee Under Provisions of the QDRO" of 20.4120% shown on 

line 17 of benefit statement. As noted, this percentage 

represents share of total accrued Plan 

benefit, which was computed by dividing $400.59 (line 6) by 

$1,962.50 (line 9). Please note that this section of the statement 

shows the amount of Plan benefit that PBGC can guarantee 

after applying the MGB. 

In the case of a QDRO like this one which does not specify how 

benefit adjustments due to the PBGC guarantee limits must be 

allocated Detween the participant and the alternate payee, 

section 6.6-3.E.3a(1) of PBGC's policy on Qualified Domestic 

Relations Orders provides that --

If the QDRO awards a specified percentage of 

tne participant's benefit amount or value to 

tje alternate payee, PBGC will proportionally 

adjust the benefits payable to both the 

participant and the alternate payee to reflect 

P3GC's adjustments to the participant's total 

benefit. 

To proportionally adjust benefit under this policy, PBGC applied 

the same guarantee ratio of 68.1661% to Plan benefit 

that applied to Plan benefit: 

(Al Line 6 x line 14 = line 18 

$400.59 x ($1,207.59 $1,771.54) 

$400.59 x 0.681661 = $273.06 

benefit statement, however, used a different 

formulation to arrive at the same result. That is, PBGC multiplied 

guaranteed (i.e., after reducing for the MGB) benefit by 

the ratio of Plan benefit to plan benefit 

(which is the 20.4120% you asked about in your appeal): 

(8) Line 15 x line 17 = line 18 

($1,962.50 x 0.681661) x ($400.59 -;- $1,962.50) 

= $1,337.76 x 0.204120 = $273.06 (6/1/2003 to 5/1/2008) 

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Similarly, guaranteed benefit beginning June 1, 2008 is 

$231.70 per month (line 19). 

As noted above, was required under the QDRO to elect 

a benefit form with a survivor annuity. PBGC's files show that he 

elected PBGC's optional Joint and 50% Survivor Annuity, which is a 

level annuity form, instead o f the Plan's automatic form. PBGC 

converted guaranteed benefit in the Plan's (non-level) 

automatic form to the PBGC Joint and 50% Survivor Annuity form 

elected by and determined t hat she is entitled to a 

benefit of $249.38 per month for life, beginning June 1, 2003 (the 

final item on PBGC's benefit statement). 

Discussion 

PBGC has paid benefits to with the same 

effective date of June 1, 2003. I n accordance with the provisions 

o f their shared payment QDRO, Ms. Pope's benefit is based on 

accrued benefit as of 19 94 , the marital 

dissolution date. Because continued to participate in the 

Plan after the divorce, his benefit increased not only because of 

additional years of service but also because of higher compensation 

amounts and improvements in the benefit formula. 

As explained above, PBGC determined guaranteed 

benefit in accordance with PBGC's method for allocating MGB 

adjustments under a shared payment QDRO. Under this method, PBGC 

applies the guarantee ratio based on the participant's full Plan 

benefi t to the alternate payee's benefit. A slightly different 

method is used for a "separate interest" QDRO. 

The Board considered whether the methodology for a "separate 

interest" QDRO would be better suited to the facts of this case. 2 

2 Under this "separate interest" method, the guarantee rati o applicable to 

_ benefit is based on the participant's Plan benefit ca lculated as of 

the Plan's t ermination date using the Plan provisions that were i~ effect five 

years before the Plan terminated (i.e., on December 6, 1997). 

accrued benefit computed in this way is $1,683.34 per month. Thus, 

share of benefit is equal to $400.59 divided by $1,683.34, or 

23 . 7973% . 

substituting the 23.7973% for the 20 . 4120% in equation (B) on page 5 of 

this letter, we fo und tha t under this method, guaranteed Plan 

benefit would be $318 . 35 per month [$1,337.76 x 23.7973 %], payable'from 

June I , 2003 throu gh May I, 2008. From June 1 , 2008 forward, her guaranteed 

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Because the" separate interest" methodology may have resulted in an 

approximately $40.00 increase to benefit and a 

commensurate decrease to benefit, we notified 

by letter, pursuant to section 4003.57 of PBGC's regulations. 3 We 

sent a copy of the same letter to you. We re~eived comments from 

you by letter dated December 12, 2007, and comments from 

by letter dated December 13, 2007. 

The Board considered these comments and ultimately decided to 

uphold PBGC's determination of benefit. First, based on 

the language of the QDRO, specifically paragraph #4, we found that 

PBGC used the proper benefit formula and years of service to 

calculate Plan benefit as of the date of the marital 

retirement (dissolution). Second, we found that PBGC properly 

categorized this QDRO as a "shared payment" QDRO. Third, we found 

that PBGC's use of the "guarantee ratio" methodology for shared 

payment QDROs was appropriate. 

Finally, we note that PBGC policy permits QDROs to be amended 

by court order . When this occurs, PBGC will review the amended 

order as a new order and suspend benefits that would be affected 

only by the amended order. If PBGC qualifies t he amended order, 

PBGC I,<,ill change the participant's and the alternate payee's 

benefits, as appropriate, but will make the changes prospectively 

only. If the terms of the amended order direct PBGC to apply it 

retroacti vely (1. e., before the submi ssion d ate ) , PBGC will not 

qualify the amended order. 

Plan benefit \owuld be $27 0 .13 per month [$1,135.13 (line 16) x 23.7 97 3%]. 

Converting this benefit to the PBGC J oint and 50% Survivor Annuity form 

elected by we found that, if this method were used, wou l d 

be entitled to a level benefit of $288.87 per month for life. 

3 Section 4003 .57 of t he regul ations provides, in pertinent part , that 

before the Appeals Board issues a decision, in whole or in part, that could 

aggrieve a third person, the Board sha ll make a reasonable effort to notify. 

that third party of the pendency of the appeal and its grounds, the grounds 

upon which the Appea l s Board is considering changing the initial 

determinati on , and, among other things, the right to submit written COlTh.'1lents 

on the appeal. See 29 Code of Federal Regulations, Secti on 4003.57. 

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-- •..... 
Decision 

Having applied the law, the terms of the Plan, the terms of 

the QDRO, and PBGC's policies and regulations to the facts in this 

case, the Appeals Board upheld PBGC's January 4, 2006 determination 

that is entitled to $249.38 per month payable for life, 

effective June 1, 2003. This is the Agency's final decision with 

respect to that determination. may, if she wishes, ask an 

appropriate federal district court to review this decision. 

If you or need other information from PBGC, please 

call PBGC's Customer Contact Center at 1-800-400-7242. 

Sincerely, 

Linda M. Mizzi 

Member, Appeals Board 

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