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Compliance October 5, 2002
Federal Judge Sides with Lucent in Pension Case
May 10, 2002 (PLANSPONSOR.com) - Seven former Lucent
Technologies managers were not wrongly denied additional
pension benefits, even though the communications company
sweetened its management pension plan after the seven took a
voluntary buyout, a judge ruled.
Reported by Fred Schneyer
US District Judge William Hart of the Northern District of Illinois ruled that Lucent’s pension administrator wasn’t being arbitrary and capricious by deciding that the seven managers were no long eligible for the added benefits under the enhanced plan, according to a BNA news report.
That’s because the seven had been switched from Lucent’s manager pension plan into a separate non-manager program.
Hart agreed with that position, ruling that when the employees were transferred to occupational jobs, they became active participants in the non-managerial plan and were excluded from being participants in the managerial plan.
According to the court, it was uncontested that none of the seven employees actually performed occupational work on their last official days with Lucent.
Necessary Transfer
The court noted that transferring to an occupational position was a necessary condition for participating in the voluntary termination program. “That none of the plaintiffs actually performed occupational duties on their last dates of employment does not mean they were not reclassified as occupational employees,” the court said.
Hart also rejected the employees’ argument that they could not be considered to have been transferred to the non-managerial plan because they did not knowingly waive or relinquish their rights under the managerial plan. The employees “cite no ERISA provision or case law requiring that they knowingly waive their continued participation” in the managerial plan, the court said.
Case Background
According to court papers, the plaintiffs received lump-sum payments of between $75,600 and $93,000 and any accrued service pension benefits, as part of the voluntary buyout program in 1997.
A year later, Lucent changed the management plan by adding a transition formula that would have given the plaintiffs larger monthly pension payments.
When the managers asked for the sweetened payment schedule, the pension administrator ruled that the workers’ agreement to the voluntary buyout also meant they had agreed to be moved out of the manager plan altogether.
The case is Bahnaman v. Lucent Technologies Inc., N.D. Ill., No. 00 C 8200.