PBGC Pension Benefit Guaranty Corporation 

7 

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

November 14, 2003 

Re: Appeal 71 

Thomaston Mills, Inc. ("TMI") Retirement Plan No. 1 

(the "Plan") 

Dear 71 

The Appeals Board has reviewed your appeal of PBGC's May 14, 

2003 determination that PBGC cannot guarantee your full Plan 

benefit. PBGC will later determine your final benefit amount, 

after PBGC finishes,collecting and verifying Plan data, documents, 

and assets. As explained below, we are denying your appeal. 

Benefit Pavments and ~eterminations 

. On February 1, 2001, TMI started paying you a $722.05' per 

month early retirement benefit. TMI calculated $722.05 using 

the Plan's '40%-50%/20 formula" because you earned more than 

20 years of service, you were actively employed on July 1, 

1976, and you were an active employee on July 1, 1998. 

The Plan's termination date is August 31, 2001. 

Effective April 1, 2002, PBGC reduced your payments to your 

estimated guaranteed benefit: $546.20 per month (20% x 

($722.05 - $502.24) + $502.24). 

. PBGC's May 14, 2003 letter: i) stated your benefit had 

increased under a Plan document signed January 27, 2000, and 

ii) explained the law limits PBGC's guarantee to 20% of your 

increase, which was put into effect 1-2 years before the 

Plan's 2001 termination date. 

YOUr A~~eal 

In your June 13, 2003 letter, you stated: 

The Plan used the 40%-50%/20 formula when you joined TMI in 

1972. 

Whenever the Plan was amended, an administrative committee 

agreed no employee would be penalized by the adoption of any 

new formula. 

' ($5,471.49 Average Monthly Earnings x 40% - $1,489.00 

Projected Social Security benefit x 50%) x 50% Early Retirement 

adjustment 
The 'newest change to the pension plan was to correct and 

restore the benefits of those who were employed before 1976." 

YOU concluded that employees hired before 1976 should not have 

their benefits treated as being increased by the last Plan 

document. 

Discussion 

Plan Provisions 

The Appeals Board reviewed all available relevant documents as 

summarized below. PEGC used the Plan document signed December 31, 

1991 (the "Prior Plan") to estimate your Prior Plan benefit as 

2 $502.24. See Enclosure 1 page 16. TMI used the Plan document 

signed January 27, 2000 to calculate your $722.05 benefit. See the 

40%-50%/20 formula on Enclosure 2 page 17, section 1.39(b) (iii). 

Number of Years the January 27, 2000 Increase Was "In Effect" 

The law limits PBGC's guarantee of a benefit increase placed 

'in effect" less than 5 full years before a plan's termination. 3 

Therefore, the Appeals Board examined the following evidence on 

when the Plan was changed to put the 40%-50%/20 formula back into 

effect: 

The 40%-50%/20 formula was not in the Plan's Actuarial 

Valuation Report for July 1, 1998 through June 30, 1999, dated 

August 1999. 

The Plan's actuaries on October 31, 2003 wrote to the Appeals 

Board: 

"Based on our review of correspondence between the Towers 

Perrin consulting team and officials at Thomaston Mills, 

Inc., it appears the decision to use the new formula was 

made in November of 1999." 

TMI used the 40%-50%/20 formula to calculate both your $722.05 

benefit and the benefit of a similarly-situated participant in 

November 1999. 

You submitted a November 18, 1999 TMI letter indicating the 

TMI Board of Directors would add the 40%-50%/20 formula to the 

Plan on December 9, 1999. 

' (($5,471.49 x .6%) + ($5;471.49 - $4,697 Social Security 

Covered Compensation) x .55%} x 27.08333 years benefit service x 

50% Early Retirement adjustment 

' PBGC phases-in benefit increases from the later of an 

amendment's adopted and effective dates. 
The 40%-50%/20 formula was added to the restated Plan document 

signed January 27, 2000. 

The Appeals Board concluded the Plan put the 40%-50%/20 

formula back into effect between 1 and 2 years before the Plan's 

August 31, 2001 termination date. Therefore, under the law PBGC 

may guarantee only 20%' of your benefit increase under the 

40%-50%/20 formula. 

January 27, 2000 Amendment Restored Benefit Formula 

You stated the January 27, 2000 amendment simply restored a 

benefit the Plan had earlier provided. Instead, the January 2000 

amendment only restored the benefit formula5 the Plan had last used 

on July 1, 1976. 

Benefit Increased from July 1, 1976 Under Prior Plan Formula 

On July 1, 1976, your 40%-50%/20 accrued benefit amount was 

based on only 6 years of service and your TMI earnings ending in 

1976. For comparison, your Prior Plan benefit amount, which PBGC 

estimated as $502.24, is based on more than 27 years of service and 

your 5-year average earnings through 1998. See footnote 2 on page 

2 and Enclosure 2. Thus, your benefit amount had already increased 

under the Prior Plan formula before the 40%-50%/20 formula was 

restored in 2000. Therefore, the January 2000 amendment only 

restored the 40%-50%/20.benefit formula - not the relatively small 

benefit amount you had last earned under the 40%-50%/20 benefit 

formula. 

Other Documents You Submi t ted 

You submitted other documents in addition to those cited 

above. The Board's conclusions in the paragraph above are 

consistent with your additional documents: 

You submitted the Prior Plan's page 16 PBGC used to estimate 

your Prior Plan benefit. See page 2. You highlighted a 

statement that your benefit may not be less than your benefit 

on page 17. However, the page-17 benefit uses a 40%-50%-30- 

year formula, with frozen service, not the 40%-50%/20 formula 

you requested. PBGC will consider the 40%-50%-30 formula when 

determining your final benefit. 

. You submitted other undated documents describing the 

40%-50%/20 formula. Those documents do not show the Plan 

' PBGC guarantees larger percentages of increases less than 

$lOO.OO. 

accruing a Normal Retirement Benefit over only 20 years 
restored the 40%-50%/20 formula sooner than 1-2 years before 

the August 2001termination date. Therefore, those descriptive 

documents do not affect the 20% phase-in of your 40%-50%/20 

benefit. 

You submitted 4 documents discussing another participant's 

benefit : 

i) A 1990 TMI memo to that other participant states, "The Plan 

provides that an individual employed prior to 7-01-76 and 

[who] has twenty years of continuous service at the time of 

retirement shall receive full benefit compensation." 

The 1990 memo may indicate a belief the 40%-50%/20 benefit 

formula would be used. However, the 40%-50%/20 formula 

clearly is not in the Plan document effective July 1, 1987 and 

signed December 31, 1991. See Enclosure 1. 

ii) A 1992 memo shows TMI calculated a $1,598.30 Plan benefit 

as the largest amount under two formulas. Neither of the two 

formulas is the 40%-50%/20 formula you requested. 

iii) Two 1993 letters note the 40%-50%/20 formula would 

produce a larger benefit. A TMI Secretary concluded the 

participant was unintentionally being "penalized" by the new 

benefit formulas. He stated the "administrative committee" 

would send a formal letter about paying the larger 40%-50%/20 

benefit. 

You have presented no evidence that a TMI administrative 

committee later sent that participant such a formal letter, or 

that TMI ever paid that participant the larger 40%-50%/20 

benefit. To the contrary, the Plan document never restored 

the 40%-50%/20 formula for such participants whose TMI 

employment ended before July 1, 1998. Further, as explained 

above, the Plan restored the . 40%-50%/20 formula for 

participants such as you 1-2 years before the Plan's August 

2001 termination date. 

Thus, the documents you submitted are consistent with phasing-in 

20% of your benefit increase under the 40%-50%/20 formula. 

Decision 

Having applied Plan provisions and the law to the evidence 

presented in your case, the Board must deny your appeal. PBGC must 

apply '20% phase-in" to your benefit increase under the 40%-50%/20 

formula. This letter concludes your administrative remedies with 

respect to PBGC's May 14, 2003 determination. When PBGC determines 

your benefit amount, PBGC will allow you another 45 days to appeal 

any new and specific issues not decided in this letter. 
When PBGC's determination of your benefit amount becomes 

final you may, if you wish, seek court review of PBGC's 

determinations with respect to the issues you have raised. We 

appreciate your patience during this careful review of your appeal. 

If you have any questions about your benefit, or if you locate any 

new specific evidence showing your benefit- should be higher, please 

contact PBGC's Authorized Plan Representative at 1-800-400-7242. 

William D. Ellis 

Appeals Board Member 

Enclosures: 

1. Excerpts from the Plan document signed December 31, 1991 

(28 pages) 

2. Excerpts from the Plan document effective January 27, 2000 

(24 pages)