PDF file encrypted with my password, does that mean my password is stored in plaintext?

Question

Every month, I receive an encrypted Portable Document Format (PDF) file with my payslip. I can open the file for reading with my password. Without providing my password, I cannot open the file at all.

Does that mean whoever created the PDF file has access to my password in a recoverable format? Or can they encrypt the PDF by using the hash or some other non-recoverable function or pair of my password, similar to how public/private key encryption works?

The format is PDF-1.4.

Note that, as I understand it, my question is different from this question. The other question is about a PDF that can be opened with restrictions, such as restrictions to copy-paste or printing. My question is about a PDF file that cannot be opened at all before decryption. Secondly, the answers there do address that the security is weak, but do not answer my core question whether this encryption implies the creator of the PDF has access to a recoverable password (plaintext or encrypted).

Edit: I mean to ask whether it is stored on their system. I do not mean to ask whether it is stored in the file.

Answer 1

Whether this encryption implies the creator of the PDF has access to the plaintext password?

In my opinion, the answer to your question is: They are storing your password in a recoverable format.

I'm assuming this is the scenario (because you were not clear about it): You have account on a website. You are generating a PDF document using the application. This document can be opened (Note: Password to open and not password to edit/copy/print) with the password of your account on the website. Is this correct?

Encrypting a PDF is done usually using RC4 or AES, a symmetric algorithm. Which means a key is generated which is used to encrypt and decrypt your PDF document.

Now this key has to be generated using your password and that key is used to encrypt the PDF. Only them would you be able to input your password and decrypt it.

Hope this answers your core question as to whether your application's password is being stored in a recoverable format.

Edit: Please refer the following additional documents:

1. PDF Reference for PDF-1.4 - Page 71 onwards
2. PDF Security
3. The undocumented algorithm

From these three links, this is what I've gathered:

1. PDF-1.4 uses RC4-128 bit keys for encryption.
2. Adobe's reference manual says that the algorithm used for generation of the key is undocumented.
3. The encryption key uses the user password (password to open), owner password (password to edit) and the permissions to generate the password.

Additionally from the information you have given, I do not think that the key is initially created and stored. Most applications use a plugin module to create PDFs which would generate the keys and encrypt on the go.

Thus, I think your password is stored in a recoverable format.