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Workers & Retirees

Frequently Asked Questions - US Airways

On March 31, 2003, the Pension Benefit Guaranty Corporation (PBGC) assumed responsibility for the Retirement Income Plan for Pilots of US Airways, Inc. This action means that PBGC's insurance program will pay the defined benefit pensions of US Airways' pilots and retired pilots, up to legal limits. The following frequently asked questions about PBGC and its insurance program are directed to current, former, and retired participants in the Retirement Income Plan for Pilots of US Airways, Inc.

1. What is the Pension Benefit Guaranty Corporation (PBGC)?

2. Why is PBGC assuming responsibility for the pensions of US Airways' pilots?

3. Does the pension plan have enough money to pay all benefits?

4. When did the pension plan end?

5. Where can I get more information about my US Airways' pension?

6. Where can I get more information about PBGC and the pension insurance program?

7. What benefits does PBGC guarantee?

8. Some pilots have taken a lump sum distribution from the pension plan. Do the limits on PBGC's guarantees apply to these lump sum amounts?

9. How does the limit on benefit improvements affect PBGC's guarantees?

10. What types of benefits are not guaranteed?

11. I am currently receiving a pension from the Retirement Income Plan for Pilots of US Airways, Inc. What happens now?

12. Will PBGC know where to send my pension checks when it becomes trustee?

13. Will the optional forms of benefits under the Retirement Income Plan for Pilots of US Airways, Inc. still be available after the plan terminates?

14. Can I get a lump sum benefit after PBGC takes over the plan?

15. I am not yet eligible to retire. Will my benefit at retirement be cut back?

16. Will the deductions withheld from my retirement check stay the same when PBGC takes over paying my retirement benefit?

17. Does PBGC insure the new pension plan that US Airways has set up for its pilots?
1. What is the Pension Benefit Guaranty Corporation (PBGC)?
PBGC is the federal government agency that insures and protects defined benefit pension plans sponsored by private employers. Defined benefit pensions promise to pay a specified monthly benefit at retirement, commonly based on salary and years on the job.
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2. Why is PBGC assuming responsibility for the pensions of US Airways' pilots?
US Airways is under bankruptcy protection and on January 30, 2003 filed an application to end the pilots' pension plan under the "distress termination" provisions of the Employee Retirement Security Act of 1974 (ERISA). PBGC has determined that the pension plan meets the legal criteria for such a termination. PBGC therefore will assume responsibility for the plan.
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3. Does the pension plan have enough money to pay all benefits?
No. The Retirement Income Plan for Pilots of US Airways, Inc. has $1.2 billion in assets to cover $3.7 billion in benefit liabilities. Of the $2.5 billion in underfunding, PBGC estimates that it will be liable for approximately $600 million, making the US Airways' pilots plan the sixth-largest claim in the agency's 28-year history. However, PBGC's insurance program protects the basic pension benefits of US Airways' pilots. PBGC will use the assets of the plan and PBGC insurance funds to pay pension benefits to current and future retirees, up to legal limits. PBGC pays benefits according to plan provisions, subject to ERISA requirements and PBGC regulations and policies. US Airways' pilots will receive the benefits they earned up to the date the plan ended (March 31, 2003), subject to those limitations.
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4. When did the pension plan end?
The plan's termination date is March 31, 2003. PBGC took responsibility for the plan on the same day.
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5. Where can I get more information about my US Airways' pension?
PBGC staff will be available from 8 a.m. to 5 p.m. Eastern Time, Monday - Friday (Participant Inquiries only: 8 a.m. to 7 p.m. Eastern Time, Monday - Friday) to answer general questions about PBGC and its insurance program. The PBGC toll-free number is 1-800-400-7242.

For TTY/ASCII users, call the Federal relay service toll-free at 1-800-877-8339 and ask to be connected to 800-400-7242. You may also write to us at: Pension Benefit Guaranty Corporation, P.O. Box 151750, Alexandria, VA 22315-1750
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6. Where can I get more information about PBGC and the pension insurance program?
See the information on the PBGC Web site, www.pbgc.gov.

A good resource on the site is the booklet, "Your Guaranteed Pension."

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7. What benefits does PBGC guarantee?
PBGC guarantees monthly pension benefits beginning at normal retirement age, certain early retirement benefits, and certain beneficiary benefits. Federal pension law limits the type and amount of benefits that PBGC guarantees. For example, PBGC guarantees benefits only up to a maximum limit, the guarantee of any benefit improvement amendment made within five years before the termination date is limited, and temporary supplements are generally not guaranteed.

Under ERISA, pension plan assets in a terminated plan are first used to pay benefits for workers who are retired or near retirement, without regard to PBGC benefit limitations. This provision means that many US Airways pilots will receive a benefit higher than the PBGC maximum guarantee for their age. US Airways' estimates show that pilots who retired or who could have retired before April 1, 2000 will receive about 85% of their April 1, 2000 benefit, and the company has adjusted April pension payments for those individuals to that level. Pilots will be informed of their PBGC benefit amount after PBGC completes its initial benefit calculations, expected within a few months after March 31, 2003.

The guaranteed monthly maximum amounts below apply to pilots who were not eligible to retire before April 1, 2000. This age adjustment schedule shows guarantee limits for a person who receives an annuity payable for life (straight-life annuity) and a person who receives a joint-and-50%-survivor annuity, which pays benefits to the surviving spouse.

PBGC MAXIMUM MONTHLY GUARANTEES
FOR PLANS TERMINATING IN 2003



Age
Straight-Life
Annuity
Joint and 50%
Survivor Annuity
65 $3,664.77 $3,298.29
64 $3,408.24 $3,067.42
63 $3,151.70 $2,836.53
62 $2,895.17 $2,605.65
61 $2,638.63 $2,374.77
60 $2,382.10 $2,143.89
59 $2,235.51 $2,011.96
58 $2,088.92 $1,880.03
57 $1,942.33 $1,748.10
56 $1,795.74 $1,616.17
55 $1,649.15 $1,484.24
54 $1,575.85 $1,418.27
53 $1,502.56 $1,352.30
52 $1,429.26 $1,286.33
51 $1,355.96 $1,220.36
50 $1,282.67 $1,154.40
49 $1,209.37 $1,088.43
48 $1,136.08 $1,022.47
47 $1,062.78 $ 956.50
46 $ 989.49 $ 890.54
45 $ 916.19 $ 824.57
44 $ 879.54 $ 791.59
43 $ 842.90 $ 758.61
42 $ 806.25 $ 725.63
41 $ 769.60 $ 692.64
40 $ 732.95 $ 659.66

HOW TO USE THIS TABLE:
If you are currently retired, use your age on the plan termination date to find the limit that applies to you. If you will retire after March 7, 2003, use the age you will be when you start your pension to find the limit that will apply to you. If you have already retired and are older than age 65, a higher maximum guarantee limit applies to you.

The joint-and-50%-survivor annuity guarantee limits in this table assume that the participant and spouse are the same age. The guarantee limits are lower if the spouse is younger than the participant, and higher if the spouse is older.
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8. Some pilots have taken a lump sum distribution from the pension plan. Do the limits on PBGC's guarantees apply to these lump sum amounts?
Yes. It is important to keep in mind that the legal limits on the benefits PBGC guarantees apply to the total plan benefit, including any benefit already received as a lump sum. For some pilots, the benefit already received as lump sum may represent all or nearly all of the benefit PBGC will pay. In such cases, the benefit the pilot receives may be reduced to zero or close to zero.
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9. How does the limit on benefit improvements affect PBGC's guarantees?
If a benefit has been increased by a plan amendment within 5 years before the plan's termination date, the guaranteed amount is reduced. Under this limit, the greater of $20 per month or 20 percent of the benefit improvement is guaranteed for each full year the improvement was in effect.
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10. What types of benefits are not guaranteed?
PBGC does not guarantee health and welfare benefits, severance and vacation pay, life insurance, and other nonqualified benefits.
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11. I am currently receiving a pension from the Retirement Income Plan for Pilots of US Airways, Inc. What happens now?
You will continue to receive your monthly pension check without interruption, subject to the legal limits on PBGC guarantees. US Airways has adjusted April, 2003 pension payments for pilots who retired or who could have retired before April 1, 2000 to about 85% of their April 1, 2000 benefit amount. Pilots will be informed of their PBGC benefit amount after PBGC completes its initial benefit calculations, expected within a few months after March 31, 2003.
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12. Will PBGC know where to send my pension checks when it becomes trustee?
Yes. PBGC will receive all information about retirees who receive pension checks from the US Airways' pension plan administrator and its bank.
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13. Will the optional forms of benefits under the Retirement Income Plan for Pilots of US Airways, Inc. still be available after the plan terminates?
For participants who apply for benefits after PBGC takes over a plan, PBGC provides benefits in the form of an annuity. For information on the types of annuities available, see "Your PBGC Benefit Options."
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14. Can I get a lump sum benefit after PBGC takes over the plan?
Generally, no. PBGC pays lump sum benefits only if the present value of the defined benefit is $5,000 or less.
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15. I am not yet eligible to retire. Will my benefit at retirement be cut back?
PBGC guarantees the benefit that you had earned as of the date of plan termination (March 31, 2003), up to the legal limits. You will begin to receive this benefit when you reach retirement age. Such a benefit is called a deferred vested benefit. However, if the benefit earned exceeds the amount PBGC is legally able to pay, the benefit must be reduced to the statutory limit. If you wish to start drawing an early retirement benefit, you must first terminate your employment with US Airways. However, if you have reached normal retirement under your plan, you may begin drawing a benefit while still employed at the company.
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16. Will the deductions withheld from my retirement check stay the same when PBGC takes over paying my retirement benefit?
PBGC deducts for federal income tax, IRS levies and qualified domestic relation orders. PBGC does not withhold state and local taxes, medical or life insurance premiums and other non-federal deductions from your pension benefit. You will need to make other arrangements for these obligations.
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17. Does PBGC insure the new pension plan that US Airways has set up for its pilots?
No. The new retirement plan is a defined contribution plan and not insured by PBGC. For more information, please contact the US Airways Benefit Center at 1-800-872-4780.
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