The consolidated appeal, currently scheduled to be filed on October 28, will challenge the rules the PGBC applied when calculating final benefits for over 3,500 retired Delta pilots. DP3 contends that PBGC’s internal procedures have artificially reduced retired Delta pilots’ benefits by an estimated $600 million; this equates to an average loss of approximately $1,200 per month for affected pilots, according to a press release.
The PBGC assumed roughly $2 billion in assets from the Delta Pilots Pension Plan (DPPP) in 2006 following Delta Air Lines’ bankruptcy filing and the bankruptcy court approved termination of its pilot pension plan. In addition to plan assets, the PBGC also recovered at least $1.28 billion from Delta during the airline’s bankruptcy proceedings (seeDelta Pilots to See Boost in PBGC Pension Benefits).
However, DP3 claims that due to procedures designed to artificially reduce the earned and funded benefits of retirees, the PBGC is currently shortchanging thousands of retirees. In addition, five years after the termination of the pension plan, the PBGC still has not calculated the benefits for hundreds of retired Delta pilots.
Among the issues being appealed is the PBGC’s use of look-backs on IRS pension limitations as these rules apply to Delta Pilot Plan Participants. “The look-back provisions applied by the PBGC severely penalize a large group of retired Delta pilots and contradict the intent of ERISA law,” said DP3 Chairman Will Buergey, according to the press release.
In 2007, charging that Delta Air Lines misread federal tax law, a group of retired pilots asked a federal bankruptcy judge to force the carrier to pay them $100 million in pension benefits the pilots said they were still owed (see Delta Pilots Group Demands $100M in Pension Benefits).