Andersen v. DHL Retirement Pension Plan

Summarized by:

  • Court: 9th Circuit Court of Appeals Archives
  • Area(s) of Law: Civil Law
  • Date Filed: 09-15-2014
  • Case #: 12-36051
  • Judge(s)/Court Below: Circuit Court Judge Berzon for the Court; Circuit Court Judges Paez and Schroeder
  • Full Text Opinion

According to the definitions provided in ERISA, one’s “accrued benefit” is reduced only if the annual benefit of a defined benefit plan is reduced or the balance of the individual’s contribution plan account is reduced.

Former employees of Airborne Express, Inc. (“Airborne”), brought this action against defendants (collectively “DHL”) alleging the elimination of a right to transfer retirement account balances between different plans violated the “anti-cutback” rule of the Employee Retirement Income Security Action (“ERISA”), 29 U.S.C. § 1054(g). Plaintiffs upon retirement had two retirement plans they could draw from: the defined benefit pension plan (the “Benefit Plan”) and the defined contribution plan (the “Contribution Plan”). The Benefit Plan was defined by the employees’ average pay, hours, and years of service. The Contribution Plan was defined by contributions made over the years. At retirement, if an employee’s Benefit Plan had a higher balance than the Contribution Plan, the employee would receive the amount of the Benefit Plan plus the difference between the plans. If an employee’s Benefit Plan had a lower balance, then the employee would only receive the amount in the Contribution Plan. Airborne allowed the employees to transfer the funds from the Benefit Plan to the Contribution Plan to eliminate the offset and receive both balances. In 2003, DHL acquired Airborne and removed this transfer option. ERISA’s “anti-cutback” rule prohibits (1) a decrease in the “accrued benefit” of a participant by an amendment of the plan and (2) a plan amendment which has the effect of eliminating an “optional form of benefit.” Because ERISA defines “accrued benefit” in a manner that considers only the benefit of individual plans and not the “end-game” benefit, the first rule was not violated. As for the second rule, the panel did not ultimately rule on whether the transfer option was an “optional form of benefit,” but found that even if it was, Regulation A-2 of the U.S. Department of the Treasury allows the application for plan amendments to be waived, thus eliminating an “optional form of benefit” pursuant to ERISA, paragraph (2). AFFIRMED.

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