Elimination of Pensioner Death Benefit Did not Violate ERISA

The appellate court agreed with the district court’s conclusion that “the Pensioner Death Benefit d[id] not meet ERISA’s definition of a pension benefit because it d[id] not provide ‘retirement income to employees,’ or ‘result in a deferral of income.'”   The district court also rejected plaintiffs’ argument that the Pensioner Death Benefit was a “retirement-type subsidy” under ERISA’s anti-cutback provision.

The district court also rejected the notion that the Pensioner Death Benefit had contractually vested as a result of language in the various plans and summary plan descriptions stating that the Pensioner Death Benefit “w[ould] be paid” and that beneficiaries were “entitled” to collect the Pensioner Death Benefit.

In its opinion, the appellate court noted that “retirement-type subsidy,” refers to a benefit that “‘continu[es] after retirement,'” and thus does not include a lump-sum payment payable in full to an employee upon retirement. In addition, the court pointed out that the plan expressly defined the term “accrued benefit” to exclude any death benefits, and also for this reason, the Pensioner Death Benefit did not vest.

The Death Benefit Plan provided a Sick Benefit, an Accidental Death Benefit, and a Pensioner Dealth Benefit. The Pensioner Death Benefit provided death benefits to certain qualified beneficiaries, if they existed, of retired employees receiving a service or disability pension, which was generally equivalent to twelve months’ wages as of the retired employee’s date of retirement. Seven retired employees of Qwest and their beneficiaries challenged the amendments to the Death Benefit Plan, claiming the amendments reduced their protected benefits against the best interest of plan participants (see Qwest Employees Fight Insurance Coverage Cutback ).

The 10 ^th Circuit’s opinion is here .