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dh Pension Benefit Guaranty Corporation pss 1200 K Street, N.W., Washington,.D.C. 200054026 

P 

MAY 0 8 2003 

Re: peal, HIP of New Jersey Staff 

Employees Retirement Plan and Trust (the "Plan") 

The Appeals Board has reviewed your appeal of PBGC's 

September 30, 2002 determination that your client, 

is not entitled to a vested benefit under the Plan. 

stated below, the Appeals Board changed PBGC's determination by 

finding that your client is entitled to a PBGC benefit. PBGC's 

Insurance Operations Department will send her a new determination 

of her benefit amount and related matters. 

Benefit Determination and A~Deal 

PBGC's letter informedthat she was not entitled to 

a benefit because she did not have the required 5 years of service 

to be eligible for pension benefits under the Plan. In your 

January 15, 2003 appeal, you contended (1) that I was 

vested because in each of the five calendar years from her date of 

hire .(March 29, 1993) through her termination of employment 

1 

(November 7, 1997) she completed 1000 hours of service and (2) that 

was vested, because in October of 1998, she received a 

letter from Barbara Flyn, the Pension Director of her former 

employer, indicating that, due to the partial termination of the 

pl.an, was 100% vested. 

Section 4022 [a) ofthe Employee Retirement Income Security Act 

("ERISA" ) states: 

"Subject to the limitations contained in subsection (b), 

the corporation shall guarantee in accordance with this - section the payment of all nonforfeitable benefits.- 

of the termination of a olanL under a single employer 

plan which terminates at a time when this title applies 

to it." (Underlining added.) 
I 

In 06inion Letter 84-4, PBGC's Office of General Counsel concluded 

thatysection 4022(a) of ERISA applies to both the termination and 

partpl termination of a plan and, as a result, concluded that 

'benbfits which become vested solely on account of termination or 

partaal termination of the Plan are.not guaranteed." 

Vestina Due to the 1.000 Hour Rule 

The original Plan was effective.January 1, 1990 and adopted 

April 30, 1990 (the "1990 Plan"). The Plan was amended and 

restated in a document effective January 1, 1996 and adopted 

October 15, 1996 (the "1996 Plan"). PBGC's Benefit Statement 

indicates that your client's date of hire was March 29, 1993 and 

that her date of terminatio of pent was November 7, 1997. 

PBGC's records indicate that transferred from employment 

covered by another plan to which the Employer contributed (the 

Garden State Medical Group) to employment covered by this Plan on 

November 25, 1996. Section 3.5 of the 1996 Plan provides that 

certain transferees, including your client, 'shall, for all 

purposes under the Plan other than for the purpose of computing the 

amount of the Member's Accrued Benefit, receive credit for periods 

of employment with the Employer prior to such transfer as if during 

such period he [or she] was a Member of this Plan." 

Section 3.l(a) of the 1990 Plan stated: '[Flollowing his 

Employment Commencement Date . . . a Member shall be credited with 

a year of Credited Service for each Plan Year [calendar year] 

during which he has completed at least 1000 Hours of Service." 

Section 4.3 of the 1990 plan provided that a Member '. . . shall be 

entitled to a Deferred Vested Retirement Allowance if, at the time 

of termination of employment, he has completed five (5) years of ' 

Credited Serviae." In your appeal, you claimed that Ms. Davis 

completed 1,000 hours of service during each of her five calendar 

years of employment (1993, 1994, 1995, 1996, and 1997), and the 

Appeals Board acceptedyour claim. Thus, under the provisions of 

the 1990 Plan, she would have become entitled to a deferred vested 

benefit. 

Under the 1996 Plan, Credited Service was defined as the total 

months of service measured in elapsed time from the Employee's 

Employment Commencement Date to the last day of the month during 

which his Severance from Service Date occurs. Thus, in order to 

complete five years of Credited Service under the provi,sions of the 

1996 Plan, your client's Severance from Service Date would have had 

to have occurred in March of 1998 (or later). As a result, she was 

not vested under the terms of the 1996 Plan. 
E 

?Section 9.5 of the 1990 Plan, however, requires that '[I]£ any 

ment changes the rate at which benefits under this Plan become 

d . - ." a Member who has completed at least three years of 

~re&ited Service "may elect to have the rate at which his benefits 

undd2 this Plan vest determined without regard to the amendment . . ..!?' Pursuant to Section 3.5 of the 1996 Plan (quoted, in part, 

abo&), the Board found thadpb was covered by Section 9.5 

of the 1990 Plan (i-e., that she should be treated as if she were 

a Member of the 1990 Plan for the purpose of applying Section 9.5 

of the 1990 Plan). 

Under the 1990 Plan's definition of Credited Service,YI 

would have been 100% vested in her accrued benefit; under the 1996 

Plan's definition of Credited Service she would be 0% vested in her 

accrued benefit. Therefore, the Board found that the 1996 Plan's 

redefinition of Credited Service constituted an amendment which 

changed the rate at which her benefits became vested. 

Consequently, under Section 9.5 of the 1990 Plan, 71 

should have been allowed to elect to have the rate at which her 

benefit became vested determined without regard to the 1996 Plan. 

She was not given this opportunity. Therefore, the Board found that 

her vesting percentage should be determined as if she had made the 

election most advantageous to herself. As a result, the Board found 

that she is entitled to a deferred vested benefit. 

Decision 

Having applied the law, PBGC's rules, and the Plan's provisions 

to the facts in this case, the Board found that your client is 

entitled to a PBGC benefit. This is a final agency action with 

respect to your client's entitlement to a PBGC benefit under the 

Plan. PBGC will send her a new benefit determination letter (with 

a new right of appeal) regarding the amount, form, and commencement 

date of her benefit. If you or your client need other information 

from PBGC, please call PBGC's Customer Service Center at 1-800-400- 

7242. 

Sincerely, 

Harriet D. Verburg 

Chair, Appeals Board 

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