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June 29, 2009 at 08:00 PM
The U.S. Supreme Court has agreed to review a decision that concerns whether an employer followed proper procedures when it changed pension benefits calculation rules.
The court has granted certiorari to Sally L. Conkright et al. Petitioners vs. Paul J. Frommert et al., a class-action brought on behalf of participants in a pension plan sponsored by Xerox Corp., Norwalk, Conn.
The plaintiffs sued the administrators of the Xerox Corporation Retirement Income Guarantee Plan and the plan itself, alleging the plan had violated the participants’ rights under the Employee Retirement Income Security Act by adding a mechanism that involved use of “phantom account” factor and the hypothetical growth of an employee’s previous lump-sum retirement benefits distribution to calculate current benefits.
The U.S. District Court for the Western District of New York entered summary judgment in favor of Xerox.
A 3-judge panel at the 2nd Circuit Court of Appeals reversed part of the district court decision.
“We find that the plan has not always contained a phantom account, that it was not properly added to the plan through amendment until 1998, that its application to employees rehired prior to 1998 violates ERISA’s anti-cutback provision by impermissibly reducing their benefits, and that its adoption in 1998 was made without proper notice to plan participants,” the 2nd Circuit says in its opinion.
