DP3, Inc.

Note: The answers provided to this FAQ is believed to be accurate, but the information is not warranted.

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HOT TOPICS

I missed the PBGC 45 day deadline for submitting an appeal. Can my name be added to the DP3 consolidated appeal anyway?

Yes. Although the PBGC may contest your ability to appeal if you are past the 45 day deadline, the PBGC has itself missed deadline after deadline. They have still not provided all of the supporting data regarding your benefit calculations, and yet they expect you to be able to make an informed decision about whether to appeal or not. This would be unacceptable if they were our legal adversaries, it is beyond unacceptable for our plan trustee to behave this way.

We will be challenging the PBGC's refusal to allow you to be a named participant in the administrative appeals, as well as any subsequent appeal.

Click for more detailed answer.

Why are there so many delays? Can't we go to court and force the PBGC act in a timely manner?

The PBGC is notorious for their bureaucratic foot dragging.

First they will have taken a full five years to get all the Final Determination letters issued.

Then they are requiring the participants in the plan to use the Freedom of Information Act before they, as trustee, will provide the supporting data and procedures they are using to calculate our retirement benefit. The DP3 trustees find this incredible.

Finally, they have delayed in providing that legally requested information, in some cases for well over a year. One of the reasons appears to be that the data is administrated by a relatively small office within the Corporation that has argued that it lacks the resources to process our requests – an argument that is especially frustrating given that those documents are necessary to insure the participant's entire post retirement livelihood is properly calculated.

So every month your DP3 board discusses whether to take the PBGC to court in order to speed up the process. Up to this point it has not been the best course of action for the following reasons:

1. It will be expensive. Court actions are never cheap, and the PBGC is notorious for putting up knee jerk defenses whenever they are questioned – dragging out the process and increasing the costs. We have limited funds and believe it far wiser to conserve them for the future challenges.
   
   
2. Because of the PBGC's propensity for delay, those court actions could end up saving very little time – and as we mention above, at significant expense.

What is the appeal timeline now?

Our administrative appeals, before a special PBGC appeals panel is scheduled to be filed on October 28, 2011. We are optimistic that our appeals will be filed at that time. We will request an in-person hearing to present evidence and believe we are entitled to receive such a hearing, but the PBGC does not usually grant them. In the past the panel has taken up to a year to issue its ruling on the appeal.

If we disagree with the PBGC panel's findings, we then, and only then, are free to challenge those findings in Federal District Court.

I was told that the PBGC would include everyone in any successful appeals, regardless of whether they were participants in the appeals process. If that is true, why should I make my DP3 contributions?

We hope that it is not only the DP3 board that finds this question morally reprehensible. We sincerely hope that the men and women we worked shoulder to shoulder with all those years are not so completely lacking in character and the last paragraph of this answer addresses that.

In fact, although the PBGC has generally said that it will apply the results of a decision to all of a plan's participants, regardless of whether or not they had a timely appeal; it has refused to commit itself to doing so in all cases. And it is an internal PBGC board that decides the administrative appeals.

The PBGC has not made any statements about how it intends to handle federal court litigation against it, and the PBGC has in the past reserved the right to disallow any retirees from bringing such a suit who did not file an administrative appeal first.

As for whether to make DP3 contributions, we suggest that any retiree who doesn't want to pay, and considers him or herself a moral person, sign a document turning over any additional benefit gains made by DP3's efforts to be distributed to the paying members of DP3. Then they can sleep with a clear conscience as well as the respect of their friends who are paying to fight for their benefits.

I have a QDRO (Qualified Domestic Relations Order- as in divorce). I have not received my BDL. If I don't receive it before the appeals begin, can I still appeal?

Yes.

The PBGC is fully aware of the QDRO situation and has agreed to add those DP3 members to the appeal as they receive their BDLs. They will have 45 days from the time the BDL is sent to them to add their names to our list.

APPEALS NUTS AND BOLTS

A primer on the DP3 appeals – Who is Affected and What is at Stake

Preface: This is not a description of the appeals themselves. It is an explanation of the 3 factors reducing our benefits.

This document is intended to serve as a primer on the PBGC procedures that reduce the benefits of DP3 members. It does not address calculation issues that may be affecting a larger number of retirees.

There are approximately 13,000 participants in the terminated Delta Pilots Pension Plan. Of that number approximately 6,500 are PC3 eligible participants who were born prior to 9/1/1953 (PC3 eligible participants are those who had retired or were eligible to retire as of September 2, 2003). Of those, just over 200 were still unretired at DOPT.

There is a shortfall of $604 million that is being carried entirely by 3,500 PC3 eligible participants (which includes the 200+ unretired at DOPT).

The 3,500 burdened PC3's are made up of approximately 1000 participants who retired prior to 7/1/2002, and 2500 participants who retired on or after 7/1/2002.

While there are a number of problems with the way the PBGC has performed our benefit calculations, one can trace the benefit reductions these 3,500 have experienced to 3 PBGC policies:

Click here for details on the three main issues.

How has DP3 decided what to appeal? Why aren't we suing Delta? Why aren't we suing ALPA?

DP3 uses very straightforward criteria to establish what will be appealed and how much of our limited resources will be applied to any particular area of appeals:

1. 1. What are the chances of success? As we have seen in the bankruptcy process, what we think is fair is not always what the law and legal system say is fair. We have focused on the issues that we believe have the highest chances of success. We are particularly fortunate that those are also the issues that meet our other two criteria below.
   
   
2. How many of our members will benefit? Unlike the situation at United, where benefiting one group of retirees will hurt another group, the issues affecting different groups within DP3 are very much aligned. The IRC look back issues affect all of the 3500 retirees that make up our appeal group. We have several appeals that affect only a portion of those retirees and we are pursuing those because the rank high in criteria #1, chance of success.
   
   
3. What is the value of the potential recovery? Again we are particularly fortunate in that the issues that meet the first two criteria, also represent the largest recoveries. As we have pointed out the IRC look back issues dwarf all the other issues, and affect all of the retirees who are among the affected 3500.

We have researched the possibilities of taking action against Delta and/or ALPA and concluded that it didn't make sense for DP3 to undertake that action - that is the costs outweighed the potential benefits.

If I appeal can the PBGC reduce my benefit?

The PBGC cannot arbitrarily change your benefit.

The PBGC takes the position that it can change anyone's benefit within 2 years after the BDL – but only if an error is found or the method of calculation is changed.

Your benefit will not be changed simply because you are appealing.

What is a "policy error" appeal?

Policy appeals refer to procedures the PBGC uses which we believe are in contradiction to the intent and word of ERISA, the Congress, and/or the Delta Pilots' Pension Plan. An example of a policy appeal is our objection to the treatment of annual adjustments to the Internal Revenue Code limits (401a and 415b) as amendments to the plan (this issue alone is costing 3500 retirees between $421 million and $553 million [present value] in benefits). These appeals affect, and success will benefit, large numbers of retirees.

What is a "calculation or data error" appeal?

Calculation or data error appeals refer to appeals of the use of inaccurate data or procedures in the calculation or of individual benefits. An example is the PBGC's use of the wrong annuity value of your lump sum, or the wrong date of hire, or not prorating the SS offset of a former Western or PanAm retiree. These sorts of errors are specific only to individual benefits and must be identified and appealed individually.

What do I do if I find a calculation error or a data error?

While DP3 may appeal several common errors for you, it is advisable for the individual to appeal also if he/she can identify any specific data or calculation error in the PBGC benefit calculations.

Note that simply pointing out that your benefit has been reduced, or that it has been reduced more than you friend's benefit, is not substantiation of an error. To successfully appeal, you must identify the specific error. DP3 will be appealing the procedures the PBGC is using to calculate all benefits, but in most cases will not appeal individual data and calculation errors.

The PBGC has advised our attorneys that the best way to handle a data or calculation error is for the participant to file an "individual appeal" of the issue directly with the Appeals Board, with documents supporting the pilot's position or contention.

An individual may have several separate individual appeals and also remain part of the DP3 consolidated appeal. To insure that you remain part of the DP3 consolidated appeals, we strongly advise using the procedure and the draft language (provided in the link below) for your appeal. You should email it to all three email addresses indicated.

Click for draft language we have prepared for you.

Is DP3 appealing anything besides policy errors?

DP3 is planning to appeal at least one common calculation error the PBGC has made (applying an erroneous 401a limit to certain 2002 and 2003 retirees), and is considering several other errors if we can confirm they are common.

I don't understand why the individual information on the appeals status page does not reflect the latest information, or the actual status of my appeal. Why is it not up to date?

When the PBGC notifies our lawyers that an extension is granted, we update our master list to show the date the PBGC told us that, and if they told us it was untimely, we note it as such. If that block on the status page is blank, it is because the PBGC has not confirmed to us whether or not they have acted on the extension request we submitted.

Part of our problems with developing this appeal is that the PBGC is and has been sloppy with administrative details. Sometimes they acknowledge our extension requests in a week, sometimes two months. Sometimes we are still waiting beyond a couple months, and despite requests for confirmation on certain individuals, none is forthcoming from the agency. Reasons are myriad, but chief among them is that the agency is severely overworked and understaffed in all departments (according to them.) Much of the work is done by contractors, and not all of the work is of the same quality or with any sense of urgency.

Does DP3 initiate the extension of the appeal date for me?

No – it is the member's responsibility to notify the PBGC by email that they are requesting an extension of their appeal deadline before the expiration of the 45-day deadline. The date of that email may come on the 44th day of the 45 day window, and DP3 only learns of a members' intent to join the appeal after that. So we may submit our request for an extension past the 45 day limit, but such a limit has already been extended by action of the member. Note that DP3 always requests an extension for every member added to the appeal, regardless of whether or not the member has previously notified the PBGC himself.

There are good reasons I did not request an appeal extension within the 45 day window. Can I appeal that?

Sometimes there are extenuating circumstances for a member being late in requesting an extension. Being ill at the time the final BDL letter is sent, or being overseas working for a foreign air-carrier are common reasons for not receiving the final BDL in a timely manner and being unable to comply with the 45 day time limit. Under provisions of a special rule in their regulations, the PBGC can and does allow exceptions to the 45-day limit for documented legitimate reasons for being past the deadline. Also, as the final BDLs are only sent by regular mail, some letters never get delivered in the first place and members only learn of a letter issue date by phoning the PBGC to ask when their letter can be expected, only to find out it was sent months ago – they simply never received it.

The DP3 attorneys will file an exception request for any Honor Roll member who believes he had legitimate reason for missing the 45-day limit.

QDRO QUESTIONS

[If you don't know what a QDRO is be grateful – that means you aren't subject to one. A QDRO is a Qualified Domestic Relations Order giving an ex-spouse a portion of your pension benefit.

Is DP3 representing those of us with QDROs?

DP3 is appealing procedures that are reducing the total combined pension benefit you and your ex-spouse are receiving.

DP3 is not appealing how the PBGC has interpreted your QDRO, or how much of your remaining pension benefit is going to your ex-spouse.

Click for more detailed answer

I am an Honor Roll member with a QDRO. Does my ex-spouse need to join the DP3 appeal also?

No. Your ex-spouse and you share one total pension benefit that is split into two parts. DP3 is working to increase that total benefit, and your name in the appeal process will suffice in enabling us to do that.

It will help if your ex-spouse can provide us with his or her BDL, and we aks that she send a DOR as well, but it is not absolutely necessary.

INDIVIDUAL APPEALS

How do I file an individual appeal, for errors on my BSW or incorrect QDRO calculations?

While DP3 may appeal several common errors for you, it is advisable for the individual to appeal also if he/she can identify any specific error in the PBGC benefit calculations.

An individual may have several separate individual appeals and also remain part of the DP3 appeals. To insure this, we strongly advise using the procedure and the template below for your appeal. You should email it to all three email addresses indicated.

The PBGC has advised our attorneys that the best way to handle a data error is for the participant to file an "individual appeal" of the issue directly with the Appeals Board, with documents supporting the pilot's position or contention. We have prepared some draft language for you – click the link below:

Click for draft language we have prepared for you.

How do I get all of my personal file information from the PBGC?

You must file a Freedom of Information Act Request (FOIA). We have prepared some draft language for you – click the link below:

Click for draft language we have prepared for you to make a FOIA request.

FORMER WESTERN/PAN AM ISSUES

I was originally Western/Pan Am and have not joined DP3 because the flat rate contributions favor the original Delta retirees who have more to gain. Should I appeal anyway?

The short answer is yes you should consider appealing if you retired on or after 7/1/2002 (click here for more information)

Former Western and Pan Am retired pilots are subject to the same reducing factors that all Delta pilots hired after 1972 are (the 401a limit on earnings, and if you were a young early retiree, the 415b limit on pension payments). Particularly if you retired at age 60, you may be seeing a larger reduction than an original Delta retiree.

As for the flat contributions rate, click for more detailed answer about that.

Former Western/ Pan Am see SS offset questions below.

SOCIAL SECURITY OFFSET QUESTIONS

What is the Social Security Offset? How much is it? When does it take effect?

Starting in 1972 our Working Agreement stipulated that when a retiree began receiving Social Security, his or her benefit would be reduced by amount called the Social Security offset. The value of the offset varies with the age the retiree begins receiving Social Security benefits and when they were hired.

Pre 72 retirees receiving retirement benefits solely under the Minimum Benefit calculation are not subject to the Social Security Offset.

Retirees who were hired prior to February 9, 1982 and are receiving retirement benefits under the FAE Formula benefit are subject to a $166.65 offset (Delta rounded it to $117, but the PBGC does not) at age 65 or $94 if the offset is applied at age 62.

Retirees who were hired after February 9, 1982 are subject to an offset of $259 at age 62 and $323.75 if SS benefits commence at age 65.

Is the SS offset the same for former Western and Pan Am pilots?

For Western and Pan Am pilots, their SS offset is prorated base on the ratio of actual years of service over 25. That means a Western pilot (originally hired prior to 1982) with 15 years of service would have a SS offset of (15/25 X $116.65)=$69.99 if he started taking SS at age 62.

We have seen this miscalculated by the PBGC and recommend that all Western and Pan Am retirees check their BSW calculations to be sure the offset is being properly applied.

Is the PBGC applying the Social Security Offset in accordance with the Contract?

No.

The PBGC is applying a "smoothing" or "evening" process where the retiree receives less than the contractual amount prior to age 65 or the application of the offset, and then receives greater than the contractual amount after that. They argue that it is "actuarially equivalent".

The problem with this procedure is if a retiree dies before he reaches his "actuarially equivalent" age, he receives less of his benefit than he earned contractually. If he lives longer than that age, he receives more.

This PBGC procedure effectively transfers benefits from those who have shorter life spans to those who have longer life spans and is not the way the contract and pension plan were designed. DP3 plans to address this issue in the appeals process.

D&S QUESTIONS

What is the status of our survivor benefits?

The info is all available at http://www.ddpsa.org The website and organization is run by Disabled Delta retirees.

The Delta Pilot Disability & Survivorship Plan (D&S plan):

I'll describe the plan below. As far as its viability, that could be in question. As part of bankruptcy proceedings, Delta was authorized to "raid" the D&S Trust Fund by spending $60 million a year to pay for active pilot sick leave pay and also to purchase $500,000 life insurance for active pilots and declining balance life insurance for pilots who retire after 2007. The fund at that time had approximately $1.6 Billion in assets. The latest figures that I have seen, from June 30, 2009 show that the fund was, at that time about $1 Billion, having sustained a loss of assets of 31% during the prior 12 months. Delta may be required to partially fund the D&S Plan if the assets fall below $1.2 Billion. From the ALPA document: If the D&S Trust balance is below $1.2 billion as of any December 31, beginning with December 31, 2010, then on the following April 15, the Company will make a cash payment to the D&S Trust equal to the lesser of 4% of free cash flow or $60 million.

Plan Year Ended 6/30	D&S Plan Assets	D&S Plan Benefit Obligations	Annual Benefit Payments	Insurance Premiums
2006	$1,656,846,000	$1,715,266,000	$101,893,000	$1,200,000
2009	$1,002,822,000	$1,575,006,000	$173,320,000	$6,118,000
2010	$989,723,000	$8,821,000,000	$176,400,000	$4,196,000

Below is a description of how the D&S Plan works:

1. THIS IS CRITICALLY IMPORTANT TO RETIRED PILOTS – Delta's Disability and Survivorship Plan (D&S plan) monthly income survivor benefits apply only to pilots who retired before 2008 and who were married to their current spouse at the time of their retirement (spouses who were married after retirement or after a pilot became disabled are not eligible for benefits under the D&S Plan). If a pilot elected a single life annuity from the retirement plan, the surviving spouse will not receive a benefit from the PBGC. However, the D&S plan will pay an eligible surviving spouse 30% of Final Average Earnings (FAE) adjusted for service of less than 25 years and retirement before age 60. The survivor's benefit is approximately the amount of your former monthly annuity before the bankruptcy. In my case I now receive $453 per month from the PBGC. Should I die, my wife would not receive anything from the PBGC (I, like nearly all of you had selected the single life annuity upon retirement). She would, however, be qualified to receive survivor benefits from the D&S plan. That amount would be 30% of my FAE. That amount is approximately the monthly annuity received from Delta prior to Bankruptcy from both my qualified check and my non-qualified check. The amount that my wife would receive is $6,800 per month, or an increase of about $6,357 per month. Her survivor benefit will have a variable feature that may increase the benefit over time.

The Delta Disabled Pilots and Pilot Survivors Association http://www.ddpsa.org is the primary source for information about the D&S plan.

The Delta Disabled Pilots and Survivors Association (DDPSA) has an updated Survivor Benefit Worksheet posted on its website at www.ddpsa.org. If a pilot inputs his Final Average Earnings, Length of Delta Service, Age at retirement and the figures provided in the worksheet for the variable benefit unit value as of the date of retirement and the current year, the worksheet will calculate a survivor benefit. Calculations from the DDPSA Survivor Benefit Worksheet usually are within pennies of the figures provided by Delta.

Here is the latest status of the D&S Plan

The latest information available to Plan Participants is contained in the IRS Form 5500 (and accompanying financial statements) for the Plan Year that ended on June 30, 2010. As of June 30, 2010, the D&S Plan had Assets valued at $989,723,000; however, the notes to the financial statement included in the tax filing indicate that the Plan Assets increased to approximately $1.1 billion as of Dec 31, 2010. Plan Benefit Obligations as of June 30, 2010 increased from $1.575 billion to $1.861 billion. The significant increase in Plan Benefit Obligations resulted from changes in actuarial assumptions, a reduction in the interest rate (discount rate) from 6.375% to 5.125%, benefits accumulated and experience of post retirement obligations and assumption of NWA LTD Plan obligations. The bottom line is that the Assets Available for Benefits as of June 30, 2010, equaled approximately 53.18% of the Plan Benefit Obligations.

During the Plan Year from July 1, 2009 through June 30, 2010, the Plan paid approximately $176.4 million to Plan Participants and Beneficiaries (including the $60 million expenditure for pilot sick pay).

I am a disabled, retired pilot. Is there any point in appealing my PBGC benefit, since the D&S plan makes up any reduction in my qualified pension payment?

If your final (BDL) PBGC pension benefit is less that the benefit you were receiving from the Pilot Trust (the Delta Pilots Pension Plan) on 9/1/2006, you should consider appealing.

***Before we go further – be sure you are comparing the single payment from the Delta Pilot's Pension Plan you received on 9/1/2006 (the pay stub called it the Pilots Retirement Trust and had the listing on the stub as Basic Tr.), with the payment you are receiving from the PBGC – NOT the payments from the D&S plan.***

Click for the reason why you should appeal: