The employee received statements from the pension fund in 2004 reflecting no pension credits for any year before 2003. She requested that pension fund reflect such credits. After the pension fund refused, she filed suit. She did not meet the criteria for participation. The federal district court dismissed the suit upon granting two Rule 56 motions for absence of genuine issue of material fact. ?Ç£In candor, for Adkins?ÇÖ counsel to attach the misleading label of ?Ç£restitution?Ç¥ to her effort to latch onto other peoples?ÇÖ entitlements masks nothing but sheer greed. . .If Adkins were to succeed, that would be nothing more or less than cheating the system.?Ç¥ Adkins v. Local 705 Int?ÇÖl Brotherhood of Teamsters Pension Fund, No. 10 c 8279 (N.D.Ill. May 26, 2011).
Two participant-plaintiffs in a multiemployer pension plan each received a notice from the plan administrator that it was rescinding certain benefits and requesting approximately $40,000 in repayments. In granting defendant?ÇÖs motion to dismiss the plaintiffs‘?á equitable estoppel claim, the federal district court held that equitable estoppel may be a viable theory in ERISA cases involving welfare plans, but is not a viable theory for cases regarding ERISA pension benefit plans, especially in the absence of evidence of ambiguity in the plan provisions. Crawford v. PIUMPF, No. 3:10-00628 (M.D.Tenn. May 23, 2011).
The Seventh Circuit held that an employer?ÇÖs obligation to contribute to a multiemployer pension fund cannot be alleviated by an oral agreement it reached with the union, even if that agreement is later put into writing and communicated to the fund. Because ERISA requires that every employee benefit plan be established and maintained pursuant to a written instrument, the court ruled that the oral agreements, even those that are later put into writing, cannot override written plan documents. Central States Pension Fund v. Auffenberg Ford Inc., No. 09-2964 (7th Cir. Mar. 11, 2011).
The Seventh Circuit Court of Appeals upheld an arbitrator?ÇÖs decision that Georgia-Pacific?ÇÖs withdrawal from the Central States, Southeast and Southwest Areas Pension Fund was ?Ç£solely?Ç¥ because of its arms-length sale of assets to a third party, where the purchaser assumed liability for the plan?ÇÖs contributions and posted a bond to ensure payment. In one of the first appellate court decisions to interpret the phrase ?Ç£solely because?Ç¥ in 29 U.S.C. ?º1384 (ERISA ?º4204), the Court stated that ?Ç£. . .the best understanding of this phrase is one that concentrates on the transaction at issue: If the sale had not occurred, everything else has remained the same, and no withdrawal liability would have accrued, then the sale to a buyer that continues the pension contributions does not entail withdrawal liability.?Ç¥ The Court cautioned that if an employer completes its withdrawal in stages, with a sale being the last step, then all transactions… Continue Reading
The Department of Labor (DOL) recently finalized an amendment to Prohibited Transaction Exemption 96-23. PTE 96-23 permits certain transactions by an employee benefit plan that would otherwise be prohibited by ERISA, where the plan?ÇÖs assets are managed by an in-house asset manager (INHAM) and other conditions are satisfied. The amendment makes several changes to the existing exemption, including: expanding the definition of INHAM to include a subsidiary that is 80 percent or more owned by the employer or a parent; permitting transactions with a ?Ç£co-joint venturer?Ç¥ under certain circumstances; and extending the exemption to cover certain existing commercial real estate leases. The amendment also increases the exemption?ÇÖs ?Ç£related person?Ç¥ test threshold from 5 percent ownership to 10 percent, and increases from $50 million to $85 million the amount of assets that must be managed to qualify as an INHAM. The amendment can be found here.
The PBGC has issued proposed regulations addressing the phase-in, as changed by the Pension Protection Act of 2006 (PPA), of its guarantee of benefits in the case of benefit increases that result from so-called “unpredictable contingent event benefits” (UCEBs). UCEBs include such things as shutdowns of different kinds of facilities, such as plants, administrative offices, warehouses, retail operations, and, in some cases, layoffs and other workforce reductions. The proposed regulations provide that the guarantee is phased in from the latest of (i) the date the benefit provision is adopted, (ii) the date the provision is effective, or (iii) the date the event occurs. The proposed regulations also address a PPA change affecting employers that terminate pension plans while in bankruptcy. If the plan termination occurs after the employer entered bankruptcy, the benefits guaranteed by the PBGC will be those benefits determined as of the bankruptcy filing date rather than the… Continue Reading
?á The Third Circuit ruled that the purchaser of assets of an employer obligated to contribute to a multiemployer plan may, under certain circumstances, be held liable for the seller’s delinquent contributions to that plan.?á?áAccording to the Court,?ásuccessor liability?ámay?áexist where the purchaser had notice of?áthe liability prior to the sale and there exists sufficient evidence of continuity?áof operations?ábetween the purchaser and seller.?á Einhorn v. M.L. Ruberton Construction Co., No. 09-4204 (3rd Cir. Jan. 21, 2011).
The U.S. Court of Appeals for the Sixth Circuit recently addressed the enforceability of a plan amendment limiting to a period of two years the duration of collectively-bargained occupational disability benefits under a pension plan. The opinion is notable because it distinguishes existing case law on the vesting of welfare benefits cited by both the participant and the plan. The plaintiff, a participant who was already receiving the disability benefits at issue, argued that the amendment violated ERISA because his benefits were vested as a matter of law. The district court agreed, relying on Int?ÇÖl Union, United Auto., Aerospace, & Agric. Implement Workers of Am. v. Yard-Man, Inc., 716 F.2d 1476, 1482 (6th Cir. 1983), under which an inference in favor of vesting is used to determine whether a right to retiree health benefits continues beyond the expiration of a collective bargaining agreement. The Sixth Circuit vacated the district court… Continue Reading
Generally, single-employer defined benefit pension plans must amortize shortfalls in funding over seven years. However, certain relief from the seven-year period was enacted this year. The IRS has issued Notice 2011-3, which provides guidance on the rules on funding relief for these plans (including multiple employer plans). The notice is presented in question and answer format and provides guidance on various topics, including the general rules for funding relief, questions relating to the effects on funding relief of installment acceleration amounts (including calculation of excess compensation amounts, excess shareholder payment amounts, and the impact of mergers and acquisitions), and elections to use an alternative amortization schedule. The notice also answers questions about notice and reporting requirements and transition rules. A copy of the notice can be found here.