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THIS IS THE OFFICIAL BOEING POSITION FOR PENSION BENEFITS
THE SICK LEAVE POLICY APPLIES TO HOURLY AND EXEMPT - NEITHER GET CREDIT FOR SICK LEAVE.

HOURLY SUPPOSEDLY GET OVERTIME CREDIT IN THE CALENDAR YEAR OF RETIREMENT.

The Boeing Company
P.O Box 3707
Seattle, WA 98124-2207
April 7, 1998
1-1851-10-0423
Donald W. Shuper
13715 NE 70th Place
Redmond, WA 98052
Re: Boeing Retirement Plan Claim and Appeal
Dear Mr. Shuper:

The Boeing Retirement Committee has made a determination regarding your claim and appeal for increased benefits under the Boeing Employee Retirement Plan.
Attached is a copy of Retirement Committee Memorandum No.694 with that determination.

Sincerely,
Thomas J. Brown
COMPANY OFFICES
Manager, Retirement Plans
1-1851 M/S 11-59
Attachment


The following is an exact scanned OCR copy - included quotes from documents mentioned are in blue, and I have added boldface in some areas
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RETIREMENT COMMITTEE
MEMORANDUM NO.694
March 12, 1998
The Committee reviewed a benefit claim appeal submitted by Donald W. Shuper, who retired under the Boeing Employee Retirement Plan on July 1, 1995. Mr. Shuper has requested a recalculation of his monthly pension benefit claiming errors were made in the determination of his Credited Service and Final Average Earnings. His initial claim was denied by the Boeing Retirement Office in a letter dated November 21, 1997.

In review of this appeal, the Committee considered the following information:

- Mr. Shuper's initial claim for increased benefits dated August 24, 1997.

- The claim denial letter to Mr. Shuper from the Boeing Retirement Office dated November 21, 1997.

- Mr. Shuper's letter of appeal dated January 13, 1998.

- The provisions of the Boeing Employee Retirement Plan as in effect at the time of Mr. Shuper's retirement (Edition of January 1, 1994).

- The 1993 summary plan description.

- Department of Labor Regulation 2530.200b

- The memorandum from S. A. Smith to Phil Corwin dated January 8, 1980 regarding the treatment of unreserved sick leave under the Plan. Mr. Smith was the manager responsible for Plan administration at that time.

- Written correspondence between Mr. Shuper and the Company regarding his claim and appeal.

ANALYSIS OF MATERIAL ISSUES

Determination of Credited Service

The Committee noted that Credited Service used to compute pension benefits under the Plan is based on Hours of Service as set forth at Sections 2.21 and 3.02 of the Plan in accordance with Department of Labor Regulation 2530.200b.

Mr. Shuper has claimed that the Plan fails to provide proper service credit for overtime. However, Section 3.02 provides that Hours of Service accumulate by one of two methods depending on the employment status of the participant as follows:


Service On and After January 1,1978. From and after January 1, 1978, the Service of an Employee shall be recorded in Hours of Service. An Employee in an employment status which is subject to the provisions of the Fair Labor Standards Act will be credited with Hours of Service on the basis of a count of hours determined from payroll records. In the case of an Employee in an employment status which is exempt from that Act, Service will converted into Hours of Service on the basis of 45 Hours of Service for each Payroll Week during which the Employee has any Service.

The 45 Hours of Service per week equivalency method is permitted by Department of Labor Regulation 2530.200b-3(e). As an exempt employee, Mr. Shuper was subject to this service counting method and, therefore, was not entitled to additional incremental service credit for overtime hours.

Mr. Shuper has also contested the fact that he was not given Credited Service at retirement for his payout of one-half of his accumulated unreserved sick leave hours.


Section 2.21 of the Plan provides in pertinent part:

Hour of Service shall mean:

(a) Each hour for which a person is paid or entitled to payment

(1) For the performance of duties for the Company or an Affiliate, including compensated bonus hours on third shift;

(2) On account of a period of time during which no duties are performed (irrespective of whether the employment relationship has terminated) but for which he is paid or entitled to payment under applicable payroll or benefit practices, such as paid sick leave and vacations;

With respect to [the] above, the same Hours of Service shall not be counted under more than one of the foregoing categories.


Mr. Shuper's claim is without merit for two reasons. First, paid sick leave here refers to paid periods of absence because of illness. Sick leave time actually used generates Credited Service as it is taken. However, Credited Service is not granted for unreserved (unused) sick leave hours paid at retirement. These hours are not paid because of absence from the Company for illness, but as part of the Company's sick leave policy when an employee retires.

Second, regular time Hours of Service were previously awarded for periods of service for which these hours accrued but were not needed. To grant Credited Service for these hours again at retirement would result in double credit for certain Hours of Service contrary to the last sentence of Section 2.21. The memorandum of January 8, 1980 from S. A. Smith to Phil Corwin, attached hereto, substantiates this administrative determination which has been consistently applied since that time.
Determination of Final Average Earnings


Section 2.20 of the Plan provides for Final Average Earnings as follows:

Final Average Monthly Earnings shall mean the average of the Basic Annual Compensation Rates on the first day of each calendar month during the 60 consecutive calendar months out of the last 120 such months, in each of which the Employee performed Service for the Company or an Affiliate, which produce the highest such average divided by twelve. If the Employee has fewer than 60 months of Service then Final Average Monthly Earnings shall mean the aggregate amount of Basic Annual Compensation Rates divided by the actual number of months of Service divided by twelve. If the Employee retires from the Active Payroll of the Company, the Employee will be deemed to have performed Service for the Company on his Retirement Date at the Basic Annual Compensation Rate in effect immediately preceding his retirement. The result of this computation will be added to the total amount of Productivity Payment Plan payments or Lump Sum Payment Plan awards which the Employee was entitled to receive during the five years immediately preceding the Employee's Retirement Date divided by 60. For purposes of the preceding sentence, Lump Sum Payments payable February 16, 1990 shall be deemed to have been received on December 22 of the previous year.

Mr. Shuper has contended that his Final Average Earnings should be calculated by including vacation pay salary rates for the two months of vacation pay he received after retirement. However, Section 2.20 provides that Final Average Earnings will include only months "in each of which the Employee performed Service for the Company." Section 2.36 of the Plan provides that "Service of an Employee shall include all service accumulated by reason of employment as an Employee of the Company or Affiliate prior to the individual's actual Retirement Date." The Plan does not provide that vacation pay received after retirement will be considered for purposes of calculating Final Average Earnings.

The Boeing Retirement Plan booklet (summary plan description) explains on page 4-10:

Your final average earnings is based on your basic annual compensation which is your annual rate of pay as of the first day of each calendar month that you are on the active payroll.


If an Employee elects to use accumulated vacation immediately prior to retirement, Service on the payroll is extended accordingly, with potential impact to Final Average Earnings.

The Plan has consistently been administered by considering compensation rates up to and including a participant's Retirement Date and excluding from consideration any payment for unused vacation after retirement.

In his claim notification, Mr. Shuper also questioned the method used to consider lump sum payment awards in the determination of his Final Average Earnings. He contends that the average of his three awards should be added to his highest five-year average of Basic Annual Compensation Rates to determine his Final Average Earnings. However, Section 2.20 provides that Final Average Monthly Earnings will include:


the total amount of Productivity Payment Plan payments or Lump Sum Payment Plan awards which the Employee was entitled to receive during the five years immediately preceding the Employee's Retirement Date divided by 60 (or divided by 5 to convert to Final Average Annual Earnings.
This provision can also be found in Article 17.5 (c) of the 1983 collective bargaining agreement between the Company and Seattle Professional Engineering Employees Association, Mr. Shuper's bargaining representative. By this method those payments are required to be evenly divided over the five-year averaging period. Mr. Shuper's Final Average Earnings was thus properly calculated.

Requests For Documents

Plan participants and beneficiaries are entitled by law to have access to certain plan documents, including any instrument(s) under which the plan is established or operated.

Mr. Shuper has made several requests for various categories of documents related to the Plan. Plan representatives, after review of governing law, determined that Mr. Shuper was entitled to the following documents and either provided them directly to him or through his bargaining representative.

 

- A statement of the participant's total accrued benefit.

- The latest annual report (Form 5500) for the Plan.

- The Plan document with provisions in effect in 1995.

- The Plan trust agreement.

- Applicable collective bargaining agreements.

- Summary Plan description.

- The Retirement Plan claims procedure. (This procedure is also contained in Retirement Plan section of Your Personal Benefits portfolio of salaried employees' benefit booklets).

- An interoffice memorandum regarding the treatment of unreserved sick leave.

Plan representatives determined that Mr. Shuper was not entitled to documents relating to demographic and actuarial data, Plan Committee memoranda unrelated to the subjects of his appeal, or internal documents addressing the appeal itself. None of these documents are required to be provided by governing law.

COMMITTEE DETERMINATIONS

In conclusion, the Committee determines that Mr. Shuper's Credited Service and Final Average Earnings under the Plan have been properly determined in accordance with Plan provisions, established administrative practice and applicable federal law. Mr. Shuper's benefit under the Plan has been determined in the same manner as all other similarly situated Plan participants. In addition, the Committee determines that Mr. Shuper has been provided all pertinent Plan documents.

The Committee upholds the determinations of the Retirement Office regarding Mr. Shuper's benefit entitlement under the Plan and hereby denies his claim and appeal for increased benefits.

Signed .... B Givens , J Dagnon, D. Crispin , ? Jaxxxx?


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