In Re Robert Leroy Vickers and Betty Jean Vickers, Debtors.j. Kevin Checkett, Trustee, Appellant, v. Robert Leroy Vickers; Betty Jean Vickers, Appellees, 954 F.2d 1426 (8th Cir. 1992)

The sole issue on appeal is whether the Employee Retirement Income Security Act (ERISA), codified as amended at 29 U.S.C. §§ 1001-1461 (1988), preempts a Missouri law which permits exemption of pension plan benefits of the debtor from the bankruptcy estate. The district court¹  adopted the findings of the bankruptcy judge²  upholding the exemption in favor of the debtors. The trustee in bankruptcy appeals. We hold that ERISA does not preempt state law exemptions of pension plan benefits reasonably necessary for the support of a debtor. We affirm the district court.³ 

The facts are undisputed. On March 15, 1990, debtors initiated proceedings for protection under Chapter 7 of the United States Bankruptcy Code. In their bankruptcy schedule, debtors claimed exemption of monthly pension plan benefits which they receive as a result of Mr. Vickers' prior employment by the FAG Bearing Company of Joplin, Missouri. While conceding that the benefits are reasonably necessary for the debtors' support,⁴  the trustee filed an objection to this exemption based on his belief that the Missouri bankruptcy provision which permits such exemptions is preempted by ERISA.

ERISA was passed by Congress in 1974. Its primary purpose was to provide "protective measures, and [to prescribe] minimum standards for promised [private pension] benefits." S.Rep. No. 127, 93d Cong., 1st Sess. 1 (1973), reprinted in 1974 U.S.Code Cong. & Admin.News 4639, 4838; see also 29 U.S.C. § 1001 (1988) ("owing to the lack of employee information and adequate safeguards concerning [the] operation [of employee benefit plans], it is desirable in the interests of employees and their beneficiaries ... that disclosure be made and adequate safeguards be provided with respect to the establishment, operation, and administration of such plans...."). ERISA specifically focused on (1) the protection of employee pension benefit plans which provide retirement on deferred income to employees and (2) fringe benefits afforded under employee benefit plans such as life and health insurance. 29 U.S.C. §§ 1001-1461.

The debtors reside in Missouri and assert a state law exemption to their ERISA plan benefits on the ground that the benefits are reasonably necessary for their support. Missouri law allows a bankruptcy debtor to exempt

(10) Such person's right to receive:

(e) A payment under a stock bonus, pension, profit-sharing, annuity or similar plan or contract on account of illness, disability, death, age or length of service, to the extent reasonably necessary for the support of such person and any dependent of such person unless;

a. Such plan or contract was established by or under the auspices of an insider that employed such person at the time such person's rights under such plan or contract arose;

b. Such payment is on account of age or length of service; and

c. Such plan or contract does not qualify under section 401(a), 403(a), 403(b), 408 or 409 of the Internal Revenue Code of 1954 (26 U.S.C. 401(a), 403(a), 403(b), 408 or 409).

Mo.Rev.Stat. § 513.430(10) (e) (Supp.1991).

In making his objection to the debtors' claim, the trustee relies on 29 U.S.C. § 1144(a), which states that the provisions of ERISA supersede "any and all State laws insofar as they may now or hereafter relate to any employee benefit plan...." The trustee urges that any state law which "relates to" ERISA is preempted if it has a connection with or reference to ERISA. See Mackey v. Lanier Collection Agency & Serv., 486 U.S. 825, 108 S. Ct. 2182, 100 L. Ed. 2d 836 (1988); Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 107 S. Ct. 1549, 95 L. Ed. 2d 39 (1987); Shaw v. Delta Air Lines, 463 U.S. 85, 103 S. Ct. 2890, 77 L. Ed. 2d 490 (1983). A majority of the bankruptcy courts which have considered this question have agreed with the trustee's analysis of section 1144(a), and have found state exemption statutes similar to Missouri's preempted by ERISA.⁵ 

We do not read the congressional preemption under section 1144(a) as broadly as the trustee. ERISA also contains a so-called savings clause under section 1144(a) which provides that " [n]othing in this subchapter shall be construed to alter, amend, modify, invalidate, impair, or supersede any law of the United States...." 29 U.S.C. § 1144(d). Cf. Shaw v. Delta Air Lines, 463 U.S. 85, 103 S. Ct. 2890, 77 L. Ed. 2d 490 (1983) (although "related" to ERISA plans, state statute regulating pregnancy benefits not preempted under ERISA because preemption would modify or impair enforcement of Title VII).

The bankruptcy court held that ERISA preemption here would impair the federal bankruptcy code. In order to protect the nation's bankruptcy debtors the bankruptcy code provides that debtors may exempt certain property from the bankruptcy estate. The bankruptcy code specifically allows a debtor to exempt pension benefits to the extent necessary for support. 11 U.S.C. § 522(d) (10) (E) (1988). The code also allows states to opt out and create their own exemptions. 11 U.S.C. § 522(b) (2) (A).⁶  The State of Missouri has exercised this option by passing Mo.Rev.Stat. § 513.430(10) (e). The Missouri exemption provision is virtually identical to that found in the federal exemption scheme.

There can be little question Congress determined that ERISA shall not impair or supersede any other federal statute. 29 U.S.C. § 1144(d). In the present case the state law providing an exemption to pension plan benefits was enacted pursuant to the authority given it by the bankruptcy code. It would be incongruous to hold pension benefits exempted under the federal bankruptcy law, but to strike down identical provisions enacted by the state under the express authorization of the bankruptcy code.⁷  Accordingly, we hold that ERISA does not preempt the Missouri exemption statute which permits debtors to exempt reasonably necessary pension benefits.⁸ 

We find no error in the district court's ruling. Judgment affirmed.