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PBGC 

Protecting America's Pensions 

Pension Benefit Guaranty Corporation 

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

April 26, 2013 

2012 determination that there 

Re: Appeal 2012-1664; Case 054297; Standard Tube Union Pension Plan 

(the "Standard Tube Plan" or the "Plan") 

Dea 

This Appeals Board decision responds to your appeal of PBGC's April 18, 

are no survivor benefits payable to the Estate of

(the "Participant") under the Standard Tube Plan. As . we 

explain below, the Board modified PBGC's determination by finding that (1) no 

benefit is or was able to the Participant under the Plan because he died in active 

service; (2) the Participant's spouse at the time of his 

death,· (the "Participant's Spouse") should have received an unreduced monthly 

lifetime preretirement survivor benefit starting on August 1, 1977; and· (3) PBGC 

shall make a one-time back payment representing all of the missed monthly 

payments to the Estate of the Participant's Spouse. As a result of this decision, 

PBGC will send a new determination to the Estate of the Participant's. Spouse 

regarding· the amount of the monthly preretirement survivor benefit that was 

payable to the Participan(s Spouse. 

PBGC's Determination Letter and Your Appeal 

PBGC's April 18, 2012 determination. letter stated· that "(t)here are no 

survivor benefits payable to the estate of s the company did 

not report any pension benefits were payab him or his estate." 

In your March 30, 2012 appeal letter, you stated, in pertinent part, as 

follows:· 

the PBGC has received documentation from the Social Security 

Administration showing certain worked for the company 

at least up and until his death was at his death Fifty Six 

years (56) of age, he began working for company, in the year of 1944 
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and he died in the year of 1977 with a total seniority years of Thirty Three. 

only needed a total of thirty years of seniority, to collect 

his pension benefits, and according to records he had a total of thirty 

three years (33). · 

At the time of death he was married, and his wife 

received none of pension which was owed to her, due to 

his time of service, and according to the UAW contract Between the 

Standard Tube of Detroit Corporation and the United Auto Workers, Page 

29 Chapter 8.5, Page 31 Chapter 9.2b, Page 33 Chapter 9.5, Page 38 

Chapter 10. 1, Page 38 Chapter 10.2a, Page 39 Chapter 10.2b, Page 40 

Chapter 10.3. 

Accompanying this letter is a letter from the John Hancock Insurance 

Company, dated May 02, 2012, An ITEMIZED STATEMENT OF EARNINGS 

from the Social Security Administration for 

covering the years of 1944 thru 1977 also a copy of the UAW contract with 

the com 	 list with the name, date of hire, and date of birth 

for 

Discussion 

1. Background 

PBGC provides pension insurance in accordance with the Employee 

Retirement Income Security Act of 1974, as amended ("ERISA"). If a plan sponsor 

is unable to support its qualified defined-benefit pension plan, PBGC becomes 

trustee of the plan and pays pension benefits as defined in the plan, subject to legal 

limitations and requirements set by Congress under ERISA. 

Records available to the Appeals Board show that PBGC became trustee of 

the Standard Tube Plan pursuant to a Consent Order issued by Judge Avern Cohn in 

the United States District Court for the Eastern District of Michigan on January 11, 

1985~ The s=onsent Order set the Plan's termination date as December 30, 1983. 

When PBGC becomes trustee of a terminated plan, PBGC obtains plan 

documents and participant data from the plan's former administrator. PBGC 

necessarily relies. on this information unless (1) PBGC's audit of the information 

" 	 reveals that it is wrong, or (2) a participant supplies PBGC with documents showing 

that the information is wrong. 

Based on our review, we have concluded that the only information PBGC 

received from Standard Tube of Detroit Corporation ("Standard Tube") regarding 

the Participant was the information written next to his name on a 1974 union 

seniority list, which showed that he had 29 years of seniority as of 1974. 

Based on the information you provided and documents available to the 

Appeals Board, we have made the following findings of fact: 
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• 	 the Participant was born on 

• 	 the Participant started working for Standard Tube on July 17, 1944; 

• 	 the Participant was a member of Local 851 of the Internatiol)al Union 

of United Automobile, Aerospace and Agricultural Implement Workers 

of America ("UAW"); · 

• 	 the Participant continued to be employed by Standard_ Tube until he 

died on July 22, 1977; I 

• 	 _at the time of his death, the Participant had earned more than 30 

years of Accrual Service; and met the eligibility requirements for an 

unreduced early-retirement benefit under the Standard Tube Plan; · 

at the time of his death, the Participant was 56 years old; 

• 	 at the time of his death, the Participant was still married to the 

Participant's Spouse, and they had been married for many years; 

• 	 after the Participant died, the Participant's Spouse received the $6,000 

life insurance benefit negotiated for members of UAW Local 851 who 

terminated employment before April 1, 1978; 

• 	 when PBGC became trustee of the Standard Tube Plan on January 11, 

1985, the Participant's Spouse was not receiving a monthly survivor 

benefit, and did not receive any payments from PBGC after it became 

the Plan's trustee; 

• 	 the Plan's former administrator did not pay a preretirement survivor 

benefit to the Participant's Spouse in the form of a one-time lump-sum 

payment because the Plan did not allow one-time lump-sum payments 

if the underlying annuity was more than $10 per month; and 

• 	 the Participant's Spouse died on July 30, 1997. 

2. 	 ERISA-Required Preretirement Survivor Annuities 

Congress passed the Retirement Equity Act ("REA") on August 23, 1984. 

REA amended ERISA and required qualified pension plans to provide a Qualified 

Preretirement Survivor Annuity ("QPSA"), subject to a participant's right to reject 

the QPSA with the written consent- of the participant's spouse. A QPSA ·provides 

survivor benefits for participants who die before they retire or are eligible to retire. 

As the Standard Tube Plan terminated before the enactment of REA, however, the 

provisions of REA do not apply in determining whether the Participant's Spouse was 

entitled to a preretiremenfsurvivor annuity under the Standard Tube Plan. 
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Before the enactment of REA, however, section 1021 of the original ERISA· 

enacted in 1974 added a new subsection (11) to section 401(a) of the Internal 

·Revenue Code ("I.R.C."). The new section 401(a)(11) required qualified definedbenefit plans to provide for "the payment of annuity benefits in a form having the 

effect of a qualified joint and survivor annuity" for active participants (1) who met 

the plan's eligibility requirements for early retirement under the plan; and 

(2) whose age was within 10 years of their Normal Retirement Age under the plan. 

Final Treasury regulations were published on January 1, 19771 regarding the 

requirements of the then new I.R.C. section 401(_a)(11). The new· Treas. Reg. 

§ 1.401(a)-11 expfained that a plan had to give written notice to active participants 

who met the plan's requirements for immediate retirement and who were at least 

age 55 regarding their opportunity to elect a preretirement survivor annuity2 for 

their spouses in the event that they died while actively employed. The regulation 

also explained, in effect, that if a participant died before receiving the required 

notice from the plan's administrator, a preretirement survivor annuity would be 

payable under the plan to the participant's surviving spouse. See Treas. Reg. 

§ 1.401(a)(11)(c)(2)(ii)(B) in Treasury Decision 7458 (cited at footnote 1). 

3. 	 The Participant's Spouse Was· Entitled to a Preretirement Survivor Annuity 

under Section 6.05 of the ERISA Restatement 

The 'Standard Tube Plan was amended to conform with the requirements of 

the new I.R.C. § 401(a)(11) effective November 1, 1976, which was the first day of 

the Plan's 1976 fiscal year. Although the Plan was properly amended, the 

provisions of the Plan's conforming amendment (the "ERISA Restatement") were 

formally adopted by Standard Tube on May 8, 1978 and made· retroactively 

effective to November 1, 1976. 3 

With respect to the "Preretirement Spouse Benefit" and notice of the 

availability of preretirement survivor coverage, the ERISA Restatement provided as 

follows: 

1 	 See Treasury Decision 7458, 42 Fed. Reg. 1463 (Jan. 1, 1977). 

2 	 The regulation referred to the preretirement survivor annuity as an "early survivor 

annuity." 

3 	 Please note that the copy of the Standard Tube Plan that you submitted with your 

appeal letter was adopted on or after July 31, 1979, and some of its provisions were 

not effective until after the Participant· died on July 22, 1977. In determining the 

Participant's Spouse's eligibility for a preretirement survivor annuity, the Appeals 

Board must apply the provisions of the Plan document that was in effect when the 

Participant died. 
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6.05 Preretirement Spouse Benefit. Each Employee shall be 

entitled to elect a benefit which will be payable to his surviving spouse 

upon his death if he dies while employed by the Company after his 55th 

birthday and prior to his 65th birthday, and has 10 years of Vesting 

Service. The benefit payable under this Section shall be in the form of an 

annuity payable to such surviving spouse for her lifetime, commencing on 

the first day of the month following such Employee's death. Subject to the 

last sentence of this Section 6.05, the amount of such annuity payments 

shall be equivalent to the amount which would have been payable to her 

under the 50% joint and survivor spouse annuity described in Section 

6.04(a) if the Employee had elected such annuity and if his retirement had 

occurred on the day before his death and within the election period 

described ·in Section 6.06. In order to offset the cost to the Plan of 

providing this survivor annuity coverage, the amount of the monthly 

pension upon which the surviving spouse's benefit is to be determined, or 

the amount of the Employee's monthly pension if he survives and 

subsequently retires, shall be reduced by 1/24 of one percent for each 

calendar month during which this election is in effect, without regard to 

any reduction under Section 6.04(a). ' 

6.06· Election and Revocation of Election of Benefits. 

(a) 	 Information to be Provided by the Board Prior to the 

Election of Benefits. 

(1) The Board shall, 180 days prior to the earlier of 

(a) the first day an Employee is eligible for a thirty-year retirement 

benefit, (b) the later of the Employee's 55th birthday or the date upon 

which he becomes an Employee, or (c). his 65th birthday if he is not 

eligible .for early retirement, furnish such Employee with the following 

written information relating to the 50% joint and survivor spouse annuity 

described in Section 6.04(a) and; if applicable, the preretirement spouse 

benefit described in Section 6.05: a general description of the annuity 

forms, the circumstances under which the annuities will. be paid, the 

availability of the election out of the 50% joint and survivor spouse 

annuity, the availability of the preretirement spouse benefit election, a 

general ·explanation of the relative financial effect on an Employee's 

retirement annuity of each election, and the availability of the additional 

information specified in subsection (2) and how to obtain this additional 

i 11formation. 

Under section 6.05, the Participant was eligible to elect a Preretirement 

Survivor Annuity for the Participant's Spouse because he died at age 56 with 10 

years of Vesting Service after November i, 1976. In. accordance with the version of 

Treas. Reg. § 1.401(a)(ll)(c)(2)(ii)(B) that was in effect when the Participant died, 

because the Participant met the eligibility requirements for an unreduced 30-year 

early-retirement benefit and was age 56 when he died, the Participant's Spouse is 

entitled to a Preretirement Survivor Annuity if the Participant did not receive the 

required writt.en notice of his eligibility to elect the Preretirement Survivor An·nuity. 

As the Appeals Board does not have a copy of any election filed by the 

Participant for Preretirement Survivor Annuity coverage, the question posed by your 
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·appeal is whether or not the Participant received the required written notice of his 

eligibility to elect Preretirement Survivor Annuity coverage for the Participant's 

Spouse. 

We note that the fact that Standard Tube did not formally adopt the ERISA 

Amendment until May 8, 1978 does not necessarily result in the conclusion that the 

Participant did not receive the required notice of eligibility to elect Preretirement 

-Survivor Annuity coverage before he died. That is so because there are often 

delays in the formal adoption of amendments for various reasons and when there is 

such adelay, plan administrators often act in accordance with the provisions of a 

plan that they know will be later formally adopted with a retroactive effective date. 

Based on the our review of the provisions of the collective bargaining 


agreement that was signed on April 2, 1977, the Appeals Board has concluded that 


it is unlikely that the Plan's administrator had any dear vision in April 1977 of the 


eventual provisions of the ERISA Amendment regarding the Preretirement Survivor 


Annuity. As Treas. Reg. § 1.401(a)(11)(c)(2)(ii)(A) required at least a 90-day 


election period, the Appeals· Board has concluded that it is unlikely that the 


Participant received the required written notice before he died in July 1977. 


Based on the preponderance of the available evidence, the Appeals Board ~ 

has concluded that the Participant did not receive the required written notice of his 

eligibility to elect the Preretirement Survivor Annuity under section 6.05 of the 

·ERISA Amendment before he died in July 1977. 

Based on Treas. Reg. § 1.401(a)(1l)(c)(2)(ii)(B) that was in effect at the 


time of the Participant's death, the Appeals Board has concluded that the Plan's 


former administrator erred in not paying a monthly preretirement survivor benefit 


under section 6.05. of the ERISA Restatement because the Participant did not 


receive the required notice. As a result, PBGC will reimburse the Estate of the 


Participant's Spouse for the monthly -benefit payments that should have been made 


to the Participant's Spouse from August 1, 1977 through July 1, 1997. 


Decision 

Having applied Plan provisions and the law to the facts of this case, the 


Appeals Board modified PBGC's determination by finding that (1) no benefit is or 


was payable to the Participant under the Plan because he died in active service; 


(2) the Participant's Spouse should have received an unrec;Juced monthly lifetime 

·preretirement survivor_ benefit starting on August 1, 1977; and (3) PBGC shall make 

a one-time back payment representing all of the missed monthly payments to the 

Estate of the Participant's Spouse. As a result of this decision, PBGC will send a 

new determination to the Estate of the Participant's Spouse regarding the amount 

of the monthly preretirement survivor benefit that was payable to the Participant's 

Spouse. 
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We regret the .delay in responding to your appeal and appreciate your 

patience while PBGC prepares the new. determination letter. Meanwhile, if you need 

additional information from PBGC, you may call PBGC's Customer Contact Center at 

. 1-800-400-7242 and ask to speak to the authorized representative assigned to the 

Standard Tube Plan (Case 054297). 

Sincerely, 

Michel Louis 

Appeals Board Member