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P6EC 1200 K Street, N.W., Washington, D.C. 200054026 YLm-u*.. 

OCT 3 0 

Re: Appeal No. 7 Trans World Airlines. Inc. 

(TWA) Retirement Plan for Pilots (the Plan) 

Dear i 

The Appeals Board reviewed your appeal of PBGC's September 20, 

2002 determination of your PBGC benefit. For the reasons stated 

below, the Appeals Board found that PBGC did not correctly 

calculate your overpayment amount, but that we,but must otherwise 

deny your appeal. 

Determination and Appeal 

PBGC determined that you are entitled to a PBGC benefit of 

$2,122.10 per month payable as a Joint and 100% Survivor Annuity 

with a Modified Cash Refund (MCRJ&lOO%SA) .' PBGC included a 

Benefit Statement, which. shows information the former Plan 

administrator (TWA) used to calculate your Plan benefit. The 

Benefit Statement shows-that PBGC used TWA's Plan benefit amount to 

calculate your PBGC benefit. PBGC's letter also stated that PBGC 

had paid you $4,446.16 too much after the Plan's termination date, 

and that this amount would be repaid by temporarily reducing your 

future monthly benefit payments. 

Your appeal letter stated that: 

1. PBGC did not provide you with information regarding how the 

PBGC arrived at its determination of the correct amount of 

your benefit; 

2. You should receive an additional $7.15 per month because your 

after-tax employee contributions to the Flight Engineer's Plan 

were used to purchase an annuity separate from the Plan; and 

3. PBGC overstated your overpayment amount in that the "Detail 

Summary" enclosed with PBGC's letter claimed that you received 

$2,400.95 for 16 months while you claim you received $2,400.95 

for only 4 months. Your appeal said that the correct amount 

1 Your MCRJ&lOO%SA provides a benefit for the rest of your life, and if you 

die first, your spouse will receive the same benefit amount for the rest of her 

life. Also, because the Plan's former sponsor made special contributions on your 

behalf, your beneficiary will receive a benefit if you and your spause die before 

you receive pension payments equal to the special contributions balance. 
of overpayment should be $724.52. 

? 1. Calculation of Your Plan-Defined Benefit and Your PBGC Benefit 

k) 

After the Plan terminated on January 1, 2001, PBGC personnel 

conducted an audit of the procedures TWA used in administering the 

Plan and calculating participants' Plan-defined benefits. After 

calculating benefits for a sampling of participants and comparing 

the results with the amounts that TWA calculated and stored in 

TWA's pension database, PBGC auditors concluded that the benefit 

amounts in TWA's database were reliable. So, for most retirees and 

in your case in particular, PBGC accepted TWA'S calculations, and 

then adjusted them to account for limitations on benefits set by 

Congress under the Employee Retirement Income Security Act of 1974, 

- as amended (ERISA). 

Page 1 of Enclosure 1 shows how TWA arrived at your accrued 

monthly benefit amount of $2,729.67. This amount agrees with 

line (1) of your PBGC Benefit Statement. Please note that page 1 

of Enclosure 1 shows that this total is the sum of four parts. 

December 31. 1982 

Your 25% minimum accbed benefit - 25% x $98.813.13 * 

Your total accrued benelit payable at age 60 as a Life ~nnuih, 

Your accrued benefit under the former TWA Retirement Plan for 

Flight Engineers as of the 1969 merger date 

Your pre-ERISA accrued benefit under the (Pilots') Plan 

Your additional accrued benefit under the Plan calculated as of 

I with a Modified Cash ~efkd (MCRLA) 1 $2.729.87 1 

$51.91 

$188.65 

$430.70 

Because you quit working for TWA after age 60, TWA adjusted 

your benefit to reflect your delayed retirement in two steps. 

First, TWA calculated a late retirement increase factor (1.11092) 

using standard actuarial formulas but using the assumption that no 

benefit would be payable either to your estate or your spouse if 

you died while actively employed. Second, TWA calculated the value 

of the benefit that would be paid in the event you died while 

actively employed, and calculated the annuitized insurance cost 

($20.94 per month) of providing that death-benefit coverage while 

you were actively employed. The factor and the insurance cost are 

shown on page 2 of Enclosure 1. Lines 2 and 3 of your PBGC Benefit 

Statement show the same factor and insurance cost that TWA had 

calculated. 

As a result of the two calculations described above, your 

accrued benefit payable at age 60 was increased for your delayed 
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3 retirement by a total of $281.85 (11.092% times $2,729.87 minus 

$20.94). Page 2 of Enclosure 1 shows that your benefit after f" 

I. applying your increase for delayed retirement was $3,011.72 

tv ($2,729.87 plus $281.85). 

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w Page 2 of Enclosure 1 also shows that TWA applied a factor 

(0.7972) to adjust your benefit to your chosen joint-annuity form. 

The same factor is shown on line 4 of your PBGC Benefit Statement. 

Page 2 of Enclosure 1 and line 5 of your PBGC Benefit Statement 

show that TWA arrived at the same Plan-defined monthly benefit 

amount ($2,400.95 = 79.72% times $3,011.72) that PBGC used in 

calculating your PBGC benefit. 

Documents in PBGC files reveal that the Plan did not have 

sufficient assets when it terminated on January 1, 2001 to provide 

all benefits that PBGC guarantees under ERISA. As a result, the 

provisions of the Plan, ERISA, and PBGC's regulations and policies 

determine the amount of: 

3 your guaranteed benefit, 

3 your ERISA § 4044 benefit, and 

3 your ERISA § 4022 (cl benefit. 

Enclosure 2 shows how PBGC calculated these benefit amounts. 

2. Your Own Contributions to the Flight Engineer's Annuity Plan 

You stated that you made after tax contributions to a postretirement annuity plan as a result of your employment with TWA and 

your membership in the Flight Engineers International Association 

(FEIA). You said that this money was used by TWA to purchase an 

annuity for all flight engineer retirees who made the required 

contributions and that your pension payments from TWA reflected a 

non-taxable $7.15 per month for your portion of the annuity 

payment. You stated that this amount should not be included in 

your TWA Pilots pension benefit calculation, but it should be paid 

in addition to your TWA Pilots pension benefit. 

PBGC records show that the TWA Retirement Plan for Flight 

Engineers (FEIA Plan) was merged into the (Pilots) Plan in 1969. 

So, at that point in time, your FEIA Plan benefit became a part of 

your (Pilots') Plan benefit calculation. As noted above, page 1 of 

Enclosure 1 indicates that your total accrued monthly annuity 

benefit payable as a result of your membership in the FEIA Plan is 

$51.91. Page 2 of Enclosure 1 shows, on the bottom of the page. 

how TWA determined that $7.-15 of the $51.91 amount was attributable 

* to your own contributions. 
Page 3 of Enclosure 1 is a form that TWA completed at the time 4 of your retirement. It indicates that you made contributions under 

the FEIA Plan totaling $2,215.01, which agrees with page 1 of 

8 Enclosure 1. Page 3 also indicates that you will have received a ? full return of your contributions after the November 2025 payment. 

Is That is, there are exactly 310 months between February 2000 and 

November 2025, inclusive, and 310 times $7.15 equals $2,215.01. 

You suggested in your appeal that PBGC should send you a 

Form 1099 each year, reflecting the fact that $7.15 of your monthly 

PBGC benefit is a return of your after-tax contributions. PBGC's 

current practice in the issuance of Forms 1099 does not include 

making a separate entry for the portion of an annuity benefit that 

returns a participant's contributions. The Appeals Board has no 

authority to change PBGC policy in this regard. 

3. Adjustment of Your Final PBGC Monthly Payment Amount 

While appeals are pending, PBGC generally continues to pay 

benefits at the estimated benefit level that PBGC was paying when 

PBGC issued the benefit determinations. The Appeals Board reviewed 

your past payment history, and agreed that the overpayment amount 

shown on your Detail Summary does not reflect the amounts you 

actually received after.the Plan's termination date. We regret any 

concerns you had regarding the overstatement of your total 

overpayment amount. 

Decision 

Having applied the law and PBGC's rules to the facts in this 

case, the Appeals Board found that PBGC did not correctly calculate 

your overpayment amount, but that we must otherwise deny your 

appeal. 

This decision is the agency's final action regarding your 

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

When PBGC's Insurance Operations Department receives a copy of 

this decision, they will review your payment history, calculate the 

total amount by which PBGC has overpaid or underpaid you, and 

adjust your monthly PBGC payment accordingly. In the meantime, if 

you need more information about your benefit, please call the 

Customer Contact Center at 1-800-400-7242. 

PLEASE NOTE that 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 higher benefit. If you have 

or obtain any such evidence, please send it to PBGC, Attn: 
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I Insurance Operations Department, Trusteeship Processing Division 

3 #I, at P.O. Box 151750, Alexandria, Virginia 22315-1750. 

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'II Sincerely, 

'is .- . '$ 

Michel Louis 

Appeals Board Member 

Enclosures (3 )