Andersen v. DHL Retirement Pension Plan, No. 12-36051 (9th Cir. 2014)
Annotate this CasePlaintiffs filed suit alleging that DHL's decision to eliminate plaintiffs' right to transfer their account balances from DHL's defined contribution plan to its defined benefit plan violated the "anti-cutback" rule of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1054(g), which prohibits any amendment of an employee benefits plan that would reduce a participant's "accrued benefit." The court, agreeing with the First Circuit and the district court, concluded that DHL's 2004 plan amendment did not, as a matter of law, violate the anti-cutback rule. The reduction of periodic benefits paid from the Retirement Income Plan that resulted from DHL's elimination of the transfer option did not violate section 1054(g)(1) where the accrued benefits of both the defined contribution and the defined benefit plan remained intact. The court further concluded that the 2004 amendment did not violate the anti-cutback rule as a matter of law where this case fits within the regulatory exception for elimination of an "optional form of benefit," even if the transfer option was such a benefit. Accordingly, the court affirmed the judgment of the district court.
Court Description: Employee Retirement Income Security Act. Affirming the district court’s dismissal of an action under the Employee Retirement Income Security Act, the panel held that defendants’ decision to eliminate plaintiffs’ right to transfer their account balances from a defined contribution plan to a defined benefit plan did not violate ERISA’s anti- cutback rule. The anti-cutback rule prohibits any amendment of an employee benefits plan that would reduce a participant’s “accrued benefit.” Plaintiffs were former employees of Airborne Express, Inc., who participated in both Airborne’s defined benefit pension plan and its defined contribution plan. The defined benefit pension plan was a floor-offset plan. That is, its benefits were calculated on the basis of a participant’s final average compensation and years of service, with an offset for any account balance in the defined contribution plan. Before the challenged amendment, participants could transfer the funds from their defined contribution plan accounts to the defined benefit plan’s general pool before the participant’s benefits were calculated. DHL acquired Airborne and merged the two companies’ retirement plans, amending the benefit plan to eliminate participants’ right to transfer funds into that plan. The panel agreed with the district court and the First Circuit that the amendment did not violate the anti-cutback rule, but it took a different path in reaching that conclusion. The panel deferred to the amicus brief of the government insofar as it interpreted Treasury Regulation A–2, which provides that, without violating the anti-cutback rule, a plan may be amended to eliminate provisions permitting the transfer of benefits between and among defined contribution plans and defined benefit plans. The panel also gave some weight to the government’s statutory interpretation. The panel held that the anti-cutback rule was not violated because the plan amendment did not reduce a participant’s accrued benefit in either the defined contribution plan or the defined benefit plan. The panel declined to decide whether the elimination of the transfer option was a “cutback” because the transfer option was an “optional form of benefit” under the anti-cutback rule. The panel concluded that if the transfer option were an optional form of benefit, then it would fall within the regulatory exception.
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