i 'BGC Pension Benefit Guaranty Corporation 

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

I JUL 2 8 2005 

Re: 1 1 Case 194313, 

Plainwell, Inc., Ret. P1. for Hrly. Emp. (the "Plan") 

We have reviewed your ameal of PBGC's May 10, 2004 

determination that your client1 1 is not entitled 

to an unreduced early retirement benefit under the Plan. For the 

reasons stated below, we are denying your appeal. 

Benefit Determination and Aoweal 

PBGC1s determination stated thadyI is entitled to an 

$801.70 monthly benefit, instead of the $973.00 estimated monthly 

benefit he was receiving. PBGC's Benefit Statement indicated that 

benefit was subject to an early retirement reduction 

factor of 0.82. In a July 19, 2004 follow-up letter, PBGC explained 

that since 'did not reach age 62 before terminating 

employment, an early retirement factor should have been applied to 

his benefit." 

PBGC's Benefit Statement also stated: "Since the benefit 

increase effective under the March 6, 1998 restatement and adopted 

on April 16, 2001 was in effect for less than one full year prior 

to the date of plan termination, no part of this increase is 

guaranteed." 

In your July 29, 2004 appeal, you contended your client was 

entitled to an unreduced early retirement benefit because he had 

attained age 62 as of his March 1, 2002 retirement date. You stated 

he was covered by a September 17, 1999 collective bargaining 

agreement ("Agreement") which provides that "Employees who qualify 

for early retirement may retire at age 62 without their pension 

being reduced." 
Au~licable Law 

When the Plan terminated on September 13, 2001, it did not 

have sufficient assets to pay benefits guaranteed by PBGC under 

Title IV of the Employee Retirement Income Security Act ("ERISA"). 

Section 4022(a) of ERISA provides that, subject to certain 

limitations contained in subsection (b), PBGC shall guarantee the 

payment of all nonforfeitable benefits under a covered plan which 

terminates. Section 4022(b)(1) of ERISA requires that any benefit 

increase ". . . resulting from a plan amendment which was made, or 

became effective, whichever is later, within 60 months before the 

date on which the plan terminates . . ." shall be phased-in, 

pursuant to Section 4022(b)(7) of ERISA, at the greater of 20% or 

$20 per month for each 12 month period '. . . following the date on 

which the amendment is made or first became effective (whichever is N later) . . . . 

The Plan was amended and restated in a document effective 

March 6, 1998 and adopted April 16, 2001 (the "1998 Plan"). The 

Agreement which you submitted was both effective and adopted on 

September 17, 1999. The Plan terminated on September 13, 2001. 

The Agreement provided the same benefit increases as the 1998 

Plan. For phase-in purposes, a benefit increase is considered to be 

"in effect" as of the later of its effective date and its adoption 

date. 

PBGC determined that 1 

ff _Iwas entitled to the $26.00 

benefit rate which became e ec ive or employees retiring on or 

after January 1, 2001. This benefit rate, however, was in effect 

for less than one full year prior to the Plan's September 13, 2001 

termination date. Thus, no part of this benefit increase was 

guaranteed. 

The Agreement provided a $24.00 benefit rate which became 

effective for employees retiring on or after'~anuar~ 1, 2000. Since 

the Agreement was adopted on September 17, 1999, the $24.00 benefit 

rate was in effect for more than one full year prior to Plan 

termination. The $24 benefit rate, however, would only provide 

with a $797.71 monthly benefit [{ ($1,051.25 t (6 yrs x 

$24)) x 0.82 Early Retirement Factor x 0.8139 Form Factor], which 

is less than his $801.24 monthly benefit (Line(l1) on Benefit 

Statement) under the pre-3/6/1998 Plan. 
In conclusion, the Board has noted that the benefit rates 

provided under the 1998 Plan were actually adopted on September 17, 

1999, rather than April 16, 2001. This, however, does not increase 

guaranteed Plan benefit, because the $26.00 benefit 

rate did not go into effect until January 1, 2001. 

Earlv Retirement Reduction under the 1998 Plan 

Section 2.02 of the 1998 Plan (excerpts enclosed) states that 

an Active Participant shall become an Inactive Participant on the 

earliest of the following four dates: 

(a) The date on which he ceases to be an Eligible Employee (or 

on his Retirement Date if he ceases to be an Eligible Employee 

within one (1) month of his Retirement Date). 

(b) The effective date of complete termination of the Plan 

(c) The date he incurs an Accrual Break in service. 

(d) The date on which he becomes covered under any other 

separate non-governmental pension or profit-sharing plan 

(other than a defined contribution plan) to which the Company 

contributes. 

PBGC1 s records indicate that terminated employment 

on September 10, 2001. Thus, under Section 2.02 (a), he became an 

Inactive Participant on September 10, 2001. Therefore, he became an 

Inactive Participant prior to his March 1, 2002 retirement date. 

Section 5.02 ("Vested Benefits") provides that a "Participant 

who becomes an Inactive Participant before retirement or death will 

be entitled to" a deferred vested benefit to begin on his Normal, 

Early, or Late Retirement Date. (Under Section 2.03, an Inactive 

Participant who is not entitled to a deferred vested benefit ceases 

to be a Participant.) 

Section 5.02(b) describes the deferred vested benefit payable 

at an Inactive Participant's Early Retirement Date: 

(b) A deferred monthly retirement benefit on the Normal 

Form to begin on his Early Retirement Date. The deferred 

retirement benefit shall be equal to the amount under (a) 

above [the amount payable at Normal Retirement Date] 

multiplied [reduced] by 0.5% for each complete month his 
Early Retirement Date precedes his Normal Retirement Date 

[the first day of the month on or immediately following 

attainment of age 651. 

Thus, Section 5.02(b) does not provide an unreduced early 

retirement benefit. 

Under Section 4.04 of the 1998 Plan, an Active Participant can 

become entitled to an unreduced early retirement benefit as stated 

below: 

An Active Participant's retirement benefit on his 

Early Retirement Date shall be equal to his Accrued 

Benefit on such specified date, reduced by 0.5% for each 

complete month his Early Retirement Date precedes his 

Normal Retirement Date. However, if the Active 

Participant has attained age 62 on his Early Retirement 

Date, such reduction factor above shall not be applied. 

Section 4.04, however, does not apply to because he 

did not attain age 62 as an Active Participant. 

Plan Practice 

PBGC's actuaries concluded it was the Plan's practice prior to 

Plan termination to pay unreduced early retirement benefits only to 

Active Participants who had attained age 62 as of their early 

retirement dates. The Board reviewed and agreed with this 

conclusion. 

Further Discussion 

The Plan terminated on Se tember 13, 2001, and PBGC trusteed 

the Plan on June 28, 2002 jppy~received a benefit estimate 

dated November 28, 2001. This benefit estimate indicates that 

would become entitled to an unreduced early retirement 

benefit as of a Benefit Commencement Date of March 1, 2002 (the 

first of the nionth following his attainment of age 62). This 

estimate, however, is inconsistent with the Plan document and Plan 

practice, because did not commence early retirement 

after attaining age 62 as an Active Participant. 

You enclosed with your appeal an excerpt from section 9 of the 

Agreement which states: "Employees who qualify for early retirement 

may retire at age 62 without their pension being reduced." 
The Board does not consider the language in Section 9 of the 

Agreement to be inconsistent with the Plan document. In particular, 

please note that is not an employee who retired at age 

62. Instead, he is a former employee who retired at age 62. 

In conclusion, the Board found that PBGC correctly based its 

determination on the clear terms of the formal Plan document and on 

the consistent practice of the Plan prior to Plan termination. 

Decision 

Having reviewed the law, the Plan's provisions, and the Plan's 

practice we are den ing the appeal you filed on behalf of your 

client, This is the agency's final decision. You 

or your client may seek court review. If you or your client need 

other information from PBGC, please call the Customer Contact 

Center at 1-800-400-7242 and ask to speak to the Authorized 

Representative for the Plan. 

Sincerely, 

William D. Ellis 

Appeals Board Member 

Enclosure: Excerpts from 1998 Plan