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#h Pension Benefit Guaranty Corporation PEGc 1200 K Street, N.W.. Washington. D.C. 20005-4026 u,cm-mRe: Appealpan American World Ainvays, Inc., Defined 

Benefit Plan for Flight Engineers (Plan or FE Plan) 

The Appeals Board reviewed your appeal of PBGC's February 28, 1997 determination that 

your PBGC benefit is $2,122.63 permonth as a Joint and5045 Survivor Annuity (J&50%SA) before 

a reduction forthe recoupment of overpayments. We appreciate yourpatience while your appeal has 

been pending and apologize for the delay. 

Based on a change in PBGC policy that became effective while your appeal was under 

rcvicw, the Appeals Board changed PBGC's determination by increasing the amount of your PBGC 

benefit to $2.774.00 per month. the amount of your full FE Plan benefit as explained below. 

PBGC's Insurance Operations Department, the office responsible for making determinations and 

payments forPBGC, will contact you directly about the adjustmentto future paymentsand back pay. 

PBGC Determinations and Your Appeal 

PBGC's letter pointed out that the $2,122.63 benefit determined is greaterthan the $2.025.00 

estimated payment you are receiving, and it included a Benefit Statement showing how your benefit 

was calculated. The letter explained that you had been both over- and underpaid, the net 

overpayment was $10,636.80 as of February 28, 1997, and PBGC would recoup the overpayment 

by permanently reducing your future payments by $107.83 if you do not repay in a single sum. 

Your April 19, 1997 form-letter appeal referenced the Pan American World Airways, Inc. 

Coopcrativc Retirement Income Plan (CRIP). This letter requested that PBGC stay the processing 

Cornoration" 

of the appeal until 

(the Pineiro 

the resolution 

case). It 

of 

also 

the lawsuit 

requested 

entitled 

that your appeal be 

"- 

consolidated<ith the appeals 

of all other CRIP parlicipants and w~th them case. The form letter asked for an explanation 

of your PBGC benefit calculation and cla~med entitlement toa "subsidized" early retirement benefit. 

The form letter asked PBGC to recuse itself from making any detcrminations of benefits and 

lo appoint an independent trustee. It asserted that PBGC had failed to retain sufficient qualified 

personnel to perform benefit calculations and that benefits were not reviewed by the independent 

acruarial firm, Milliman USA (Milliman), retained by PBGC for Plan calculations. The form letter 
also asked PBGC to provide you with all documents, notes, records and computations that relate to 

you and your benefit determination. (Note: Your PBGC Benefit Statement provided information 

used to compute your PBGC benefit. The record also shows that PBGC's Disclosure Officer sent 

you acopy of the information contained in your PBGC participant file on June 3,1997, and by letter 

dated September9.1998 the Clerk of the Appeals Boaid sent copies of the Plan documents the form 

letter requested.) 

Discussion 

The form letter cited the CRIP. Please note that PBGC's February 28, 1997 determination 

pertains solely to your benefit under the FE Plan, as does this appeal decision. The FE Plan is a Pan 

Am pension plan separate from the CRIP. (The record shows you also have a benefit under the CRIP 

and that PBGC is paying you $79.61 per month under that plan.) 

Documents in your PBGC file and your PBGC Benefit Statement for the FE Plan show that 

you were born July 24,1921, hired March 9,1943, and retired January 1, 1983 (age 61), more than 

8 years before the Plan ended on July 31, 1991. The FE Plan Administrator determined and 

authorized payment of your $2,774.00 monthly J&SO%SA. 

When PBGC is appointed trustee of a terminated pension plan, it pays benefits on an 

cstimatcd basis. Estimatedpayments are intended to minimize financial hardship forretirees while 

PBGC is preparing formal benefit determinations. During this period, PBGC completesseveral tasks, 

including: (1) the audit of plan records; (2) the calculation of PBGC benefits; and (3) the preparation 

and mailing of PBGC determination letters and benefit statements. A participant continues to 

receive estimated benefits until his or her benefit determination becomes final. 

Maximum Guaranteed Benefit Limitation 

The difference between your FE Plan benefit calculated by the former FE Plan Administrator 

and the amount PBGC calculated is due to a legal limits on guaranteed benefits prescribed by the 

Employee Retirement Income Security Act of 1974, amended (ERISA). PBGC determined that 

your FE Plan benefit is limited by ERISA's "Maximum Guaranteed Benefit" (MGB), which we 

explain next. ERISA 5 4022(b)(3); see 29 Code of Federal Regulations (C.F.R.) $4022.22. 

As stated above, however, due to a policy change while you appeal has been pending, the MCB 

nu longer limits your PBGC payments. 

The MGB for plans terminating in 1991, such as your Plan, payable in the form of a Straight 

Life Annuity (SLA) with benefits commencing at age 65 is $2,250.00 per month. This amount is 

adjusted for a participant's age at the later of hidher benefit commencement date and the plan 

termination date and for an annuity form other than an SLA. You retired before the FE Plan ended 

and you were older than age 65 as of the Plan termination date. Thus, a reduction for payments 

beforeage 65 was not required, and the rules in effect when your determination letterwas issueddid 

not increase the MGB for your age greater than 65 as of the FE Plan termination date. 
PBGC regulations convert theMGB as an SLA to your J&SO%SA form by a factorof0.9000 

for a same-age (nearest birthday) couple, resulting in an MGB of $2,025.00 ($2,250.00 x .9000). 

This is the same amount shown on line (2) of your PBGC Benefit Statement. 

While the Board did not find PBGC's applicltion of the MGB limit to your benefit to be 

incorrect, the Board has previously found that benefits such as your should be recalculated in 

accordance with PBGC policy that went into effect during the pendency of your appeal. Under this 

new policy, PBGC adjusts the MGB upward for retirees who were over age 65 as of a plan's 

termination date. PBGC's over-age-65 adjustment factor for a person 70 years and 1 month of age 

as of July 31, 1991 is 1.6830 (PBGC Late Retirement Factors from Actuarial Technical Manual). 

The resulting MGB adjusted for annuity form and age is $3.408.08 ($2,250 x 1.6830 x 9000). 

Please note, however, that PBGC may not pay you more than your FE Plan benefit. The Appeals 

Board found, therefore, that you are entitled to receive your full FE Plan benefit of $2,774.00. 

When you retired the FE Plan began paying you $2,774.00 per month. Effective March I, 

1993, PBGC reduced your payments to an estimated amount of $2,025.00. PBGC's letter dated 

February 2, 1993, advised you of the reduction and that the new amount was an estimate. You, 

therefore, have been underpaid since March 1, 1993. 

Other Matters 

The form letter cited themcase. which was filed by some CRtP participants and does 

not seek relief for FE Plan participants. It asked that PBGC stay the processing of your appeal 

pendingthe resolution of-. Extensions pending resolution of that case are not necessary since, 

if a court in the Pineiro case were to issue a final order granting any relief to CRP participants and 

if PBGC also decided that FE Plan participants should receive similar treatment, PBGC would 

provide the relief to similarly-situated FE Plan participants without regard to whether they had filed 

appeals of their benefit determinations or whether their appeals were previously decided. 

The form letter asked that your appeal be consolidated with the appeals of other similarly 

situated appellants. The Appeals Board may, at its discretion, consolidate appeals where the facts 

and relief sought are the same. 29 C.F.R. § 4003.56 [2002]. The Board decided to consolidate 

appeals under the FE Plan with respect to certain issues raised in the form letter that are discussed 

below 

The form letter asked that PBGC recuse itself from making any determination of benefits and 

that PBGC appoint an independent trustee. The Appeals Board has concluded there is no conflict 

of interest with respect to its deciding appeals of FE Plan participants. PBGC established the 

Appeals Board to provide an independent review of benefit determinations ro assure they comply 

with ERISA, PBGC regulations and the terms of the plans PBGC trustees. Furthermore, a 

participant may seek judicial review of the Board's decision. Therefore. the Appeals Board sees no 

reason why it should not review the appeals of FE Plan benefit determinations. 
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,D The form letter questioned the accuracy of PBGC's determinations based on who issued I. them. The Appeals Board previously found that all the determinations PBGC has issued on all of the 

is Pan Am pension plans, including the FE Plan, are based on the actuarial work performed by 

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I Milliman. Also, in certain instances where PBGC was unable to obtain the underlying data upon I* which pension calculations were based, Milliman and PBGC accepted the calculations previously 

made by Pan Am. However, Milliman did not check the formerFEPlan Administrator's calculation 

of the benefit of every participant receiving a benefit when the FE Plan ended. 

The form letter claimed that youmay havebeen improperly denied payment of a"subsidized" 

early retirement benefit. Please note that the "subsidized" early retirement provisions of the CRIP 

do not apply for the FE Plan. 

Decision 

Having applied the provisions of the FE Plan, the law and PBGC rules to the facts of your 

case, the Appeals Board found that the future monthly payments will be increased to $2,774.00, the 

full amount of your FEPlan benefit. PBGC's Insurance Operations Department will implement this 

decision and contact you directly regarding back pay. 

The Appeals Board has previously decided the issues raised in the form letter. Because you 

have not presented a basis for changing these matters (29 C.F.R. $ 4003.54), we must deny your 

appeal of these issues. This is the final agency decision and you may, if you wish, seek court review. 

We regret the delay in our response and appreciate your patience while your appeal has been 

pending. If you need any other information from PBGC, please call the Customer Service Center 

Sincerely, 

Harriet D. Verburg 

Chair, Appeals Board