Judge Anita B. Brody of the U.S. District Court for the Eastern District of Pennsylvania noted under the Employee Retirement Income Security Act (ERISA) “[o]nly a formal written amendment, executed in accordance with the Plan’s own procedure for amendment, could change the Plan.” Brody said: “Although Baker believes that the Board’s statements of intent to adopt a Rule of 74 and its 1999 and 2002 resolutions entitle her to a Rule of 74, the Supreme Court has made abundantly clear that a claim under Section 502(a)(1)(B) ‘stands or falls by the terms of the plan,’ and ‘forecloses any justification for enquiries into nice expressions of intent . . . .’”
The plan allowed for participants who retired at age 55 to receive full retirement benefits if their age plus years of service totaled 90 (Rule of 90). The resolutions stated that if the plan was terminated the rule would change so that an age 55 retiree could receive full benefits if age plus years of service totaled 74 (Rule of 74).
However, the court did find that Baker may be able to obtain equitable relief to redress violations of parts of ERISA because “[W]hen a plan administrator affirmatively misrepresents the terms of a plan or fails to provide information when it knows that its failure to do so might cause harm, the plan administrator has breached its fiduciary duty to individual plan participants and beneficiaries.” Brody determined Baker’s second alleged breach that the plan administrators breached their fiduciary duties when they made assurances to her that the Rule of 74 pension would be available may potentially form the basis for a cognizable breach of fiduciary duties claim.
The Pennsylvania Economy League, Inc. passed a resolution in 2009 that its Retirement Income Plan be reviewed during 2009 with the intent it be terminated at the end of that plan year and if the Plan is so terminated, it would be amended effective December 31, 2009, to provide an unreduced early retirement benefit for any participant who has as of that date a minimum of 10 years of vesting service and whose combined attained age and service totals 74 or greater.
In 2002, a resolution was passed that “benefits will cease to accrue under the Plan as of December 31, 2009, and no benefits shall accrue under the Plan subsequent to December 31, 2009.” The Board also resolved that “the Plan be amended to reflect the cessation of accruals under the Plan as of December 31, 2009.” On September 19, 2008, the Board advanced the plan “freeze” in accrual of benefits by one year, changing the date that benefits would cease to accrue from December 31, 2009, to December 31, 2008. However, no plan amendment was made to adopt the Rule of 74 provision.
In October 2009, Baker filed a benefit claim requesting an immediate and unreduced Rule of 74 pension under the plan. Baker’s claim was denied since “according to PEL’s actuary, Conrad Siegel, though the Board had adopted the Rule of 74, the language of the plan was never changed to reflect that action.”
The case is Baker v. Pennsylvania Economy League Inc. Retirement Income Plan, E.D. Pa., No. 2:10-cv-06738-AB.
« Sanford Rose Associates and The Devine Group Form Strategic Alliance