Date of Plan Termination: June 14, 2002
Date of PBGC Trusteeship: September 30, 2003
I am a retiree in the Lorain Plan and have just received a benefit determination from PBGC. What does this mean?
The benefit determination is a letter that states the amount of retirement benefit PBGC is legally allowed to pay you under the Lorain Plan. As you know, federal law limits the benefit amounts PBGC is allowed to pay. Until now, the monthly benefit you have been receiving from PBGC has been our estimate of the amount you are due.
PBGC determines your benefit amount after carefully reviewing your data, calculating the benefit payable by your pension plan, and applying the limits set by law. Your benefit determination informs you of any adjustments that must be made to your benefit, when the adjustment will be made, and how to contact PBGC with questions.
The PBGC letter states I have been receiving an estimated benefit. What does that mean?
Before PBGC can determine final benefit amounts, we must perform the complex and time-consuming tasks of gathering and reviewing participant records, calculating the benefits under the pension plan, and applying the limits set by law. This process typically takes several years to complete. In the meantime, PBGC pays you its best estimate of what your final benefit will be. Paying estimated benefits ensures that retirees continue to receive benefits without interruption, and that new retirees receive their benefit within four months of the time we are contacted with a request to start benefits. All payments received before June 1, 2008, the date your benefit determination from PBGC goes into effect are estimated benefits.
What are the legal limits on benefits paid by PBGC?
The law allows PBGC to pay only those benefits for which you had satisfied your plan's requirements as of June 14, 2002. For example, the Lorain Plan offers a special early retirement benefit that requires 30 years of service. PBGC cannot provide that retirement benefit to anyone with less than thirty years of service as of June 14, 2002..
In addition, there are three limits that apply to guaranteed benefits.
Supplemental Benefits: Supplemental benefits are temporary payments made only for a fixed number of years after you retire, typically until you become eligible for Social Security. These benefits are not fully guaranteed under the law. Many individuals in the Lorain Plan who were being paid these supplemental benefits will no longer receive them. Generally, PBGC cannot pay any monthly pension amount that is greater than the monthly benefit your plan would have provided if you had retired at your normal retirement age.
Maximum Benefit Guarantee: PBGC's maximum benefit guarantee is set by law each year. For plans that ended in 2002, the maximum guarantee is $3,579.55 monthly for a straight-life annuity beginning at age 65. This amount is lower if you begin receiving payments from PBGC before age 65 or if your pension includes benefits for a survivor or other beneficiary. The guarantee amount is higher if you are over age 65 when you begin receiving benefits from PBGC.
If you were retired as of June 14, 2002, your age on that date is used to determine the maximum guarantee. Otherwise, your age as of your retirement date is the age used to determine the maximum guarantee.
Phase-in of Guarantee of New Benefits: Because your plan was amended to increase benefits within five years before June 14, 2002, your benefit may not be fully guaranteed. PBGC guarantees benefit improvements up to the larger of 20 percent of the benefit or $20 per month for each full year the benefit was in effect.
When did PBGC adjust Lorain Plan benefits to estimated amounts?
Most benefit adjustments were made in October 2004.
PBGC became trustee of the plan in September 2003. Why did you wait a year to adjust benefits?
When PBGC took over as trustee of the Lorain Plan on September 30, 2003, the termination date of the plan was still in dispute. The United Steelworkers of America had asked the courts to set August 17, 2002 as the termination date for the Lorain Plan. While the issue was being resolved by the courts, PBGC continued to pay benefits without applying the legal limits, as if the plan had not terminated. In October 2004, the appeals court settled the dispute by setting June 14, 2002 as the termination date. With the termination date set, PBGC began making adjustments to benefits.
My benefit determination letter says that I have been overpaid. How did that happen?
PBGC is required to apply the legal limits to all benefits you received after June 14, 2002. Between that date and October 2004, while litigation over the plan continued in the courts, most retirees in the Lorain Plan received monthly checks for more than their legally allowed benefit amount. PBGC is required to collect (or recoup) this overpayment from retirees.
How much is my overpayment, and how will PBGC recoup it?
Your benefit determination letter tells you the amount of the overpayment you have received. PBGC will collect this overpayment by making a small reduction to your monthly benefit payment until the amount owed has been repaid. This recoupment amount will not exceed 10 percent of your benefit, and no interest is charged.
How long will this recoupment continue?
The recoupment will continue until the overpayment has been fully repaid. PBGC will not charge any interest on the overpayment. If the full amount has not been collected when benefit payments to you (or your beneficiaries) stop, we will not attempt to collect the balance from your estate.
My benefit determination letter says that I have been underpaid. What happens now?
We will make up the amount we owe you in a single payment with interest.
I have several questions on the calculation of my final benefit. Whom should I contact?
If you have a question about your benefit or how it was calculated, you can call PBGC's Customer Contact Center for an explanation. Our Customer Contact Center is available at 1-800-400-7242 from 8:00 a.m. to 7:00 p.m. Eastern Time, Monday - Friday (except federal holidays). TTY/TDD users can call the federal relay service toll-free at 1-800-877-8339 and ask to be connected to 1-800-400-7242.
What do I do if I disagree with the facts in your calculation?
Your benefit determination letter explains your right to appeal PBGC's determination of your benefit. In any appeal you should provide specific reason(s) why the determination is wrong. Your written appeal must be submitted within 45 days of the date of our formal determination letter informing you of your benefit. If you need more time to resolve your question before that 45-day limit expires, you can request an extension from PBGC's Appeals Board.