This is intended to provide guidance for pilots in the United Air Lines Inc. Pilots Fixed Benefit Income Plan regarding the impact of the Fair Treatment for Experienced Pilots Act on benefits payable from PBGC. Title IV of ERISA is a complex law, and our guidance here is general in nature. There may be exceptions or factual variations that must be taken into account in individual cases.
Q1: Under the Fair Treatment for Experienced Pilots Act, I can continue to work as a pilot until age 65. What effect does this have on the United Air Lines Inc. Pilots Fixed Benefit Income Plan?
A: The Act has no impact on the provisions of a pension plan that had already been terminated. The normal retirement age (age 60) is determined under the provisions of your plan that were in effect on its termination date.
Q2: Can I start drawing my benefit from the United Air Lines Inc. Pilots Fixed Benefit Income Plan after I reach age 60 if I am working for United Airlines?
A: The United Air Lines Inc. Pilots Fixed Benefit Income Plan defines your normal retirement date as the first day of the month on or after your 60th birthday. While working for United Airlines, you may draw your PBGC benefits anytime after you have reached your normal retirement date. Of course, whether or not you are working for United Airlines, no further benefits accrue under a terminated pension plan after its termination date.
Q3: If I start drawing my benefit from the United Air Lines Inc. Pilots Fixed Benefit Income Plan after age 60, how will it be calculated?
A: Your benefit will be calculated under the terms of the United Air Lines Inc. Pilots Fixed Benefit Income Plan, taking into account the later (i.e. post-normal retirement date) commencement date, and will be subject to guarantee limits set by federal pension law. The maximum benefit guarantee, if it affects your benefit, will be based on your age at the later commencement date.
Keep in mind, if your benefit funded by plan assets in PC-3 exceeds the benefit otherwise guaranteed by PBGC, we will pay you your funded PC-3 benefit, which is the monthly amount of your benefit determined at the date three years before the plan's termination date (or at actual retirement date, if earlier). There is no actuarial increase for PC-3 benefits commencing at a later date. The amount of the PC-3 benefit is, however, adjusted to reflect the benefit form (such as a joint-and survivor annuity) payable at the benefit commencement date.
Age and service on the date the plan ended (December 30, 2004):
53 with 26 years of service
Payable by Plan Assets
Payable by PBGC
(Greater of PC3 Benefit
and Maximum Guarantee)
In this example, the maximum monthly benefit guaranteed by PBGC for a pilot starting to draw benefits at age 62 or age 65 exceeds the monthly benefit funded by plan assets.
Q4: I am currently drawing my benefit from the United Air Lines Inc. Pilots Fixed Benefit Income Plan. Will my benefits be suspended if I return to work for United Airlines?
A: It depends on whether you have reached your normal retirement date. If you have reached your normal retirement date when you return to work, your benefits will not be suspended. If you have not reached your normal retirement date when you return to work, your benefits will be suspended.