>The situation presented in the case the US Supreme
Court accepted Monday is especially common in law
enforcement, military, and other government work, where
employees can earn attractive pension benefits after
relatively short careers of 20 years or so, according to an
Associated Press report. The scenario allows workers to
retire from one job while still relatively young, and draw
a pension while earning a paycheck in a new field.
In the latest case, the two former construction laborers retired with full pension benefits at age 39 and drew their pensions for two years, until their pension fund changed the rules governing who was eligible for the payments. The pension fund’s rules allowed for early retirement with benefits, but made clear that employees would temporarily lose benefits if they took on certain “disqualifying employment.”
Plaintiffs Thomas Heinz and Richard Schmitt Jr. both became construction supervisors when they retired from their original jobs in 1996. At the time, that meant they were still eligible for their pension benefits.
In 1998, however, the pension fund said it would no longer allow early retirement pension payments to people who began second careers in any kind of construction industry job. The fund suspended benefits to Heinz and Schmitt, who sued in federal court. Heinz and Schmitt eventually won their case at the US 7th Circuit Court of Appeals, which prompted the pension fund to ask for a Supreme Court review.
The Central Laborers’ Pension Fund claims there is an exception in cases like this one for the rule that pension plans usually can’t cut back on promised benefits. Two federal appeals courts have reached opposite conclusions.
>It is not clear whether the Supreme Court’s ruling, expected by summer, would cover only pension benefits administered by multiemployer plans or whether it would apply more broadly.
>At the high court, the Bush administration is
supporting the pension fund and urged justices to hear the
“Multiemployer plans provide coverage for millions of
workers throughout the nation, and suspension-of-benefit
provisions are frequently used by these plans to manage
plan expenses and workforce levels,” Solicitor General
Theodore Olson argued in a friend-of-the-court filing.
The Laborers’ Pension Fund operates as a pool that covers employees of many different individual employers. Such multiemployer funds provide pension coverage to about 10 million workers in the United States, or one in five workers covered by a pension plan, according to an industry group.
The case is Central Laborers’ Pension Fund v. Heinz, 02-891.