Page v. Pension Ben. Guar. Corp.
| Decision Date | 10 July 1992 |
| Docket Number | 91-5254,Nos. 91-5253,s. 91-5253 |
| Citation | 968 F.2d 1310 |
| Parties | , 61 USLW 2058, 15 Employee Benefits Cas. 1665 Estella PAGE, Appellant, v. PENSION BENEFIT GUARANTY CORPORATION. Mary E. COLLINS, Appellant, v. PENSION BENEFIT GUARANTY CORPORATION, et al. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Stephen R. Bruce, with whom Mark A. Borenstein was on the brief, for appellants in both cases.
Israel Goldowitz, with whom Carol Connor Flowe, Peter H. Gould, Jean Marie Breen and Charles G. Cole were on the brief, for appellees in both cases.
George B. Driesen was on the brief, for amicus curiae, American Association of Retired Persons. Robert L. Liebross also entered an appearance for amicus.
Before: MIKVA, Chief Judge; RUTH BADER GINSBURG, and HENDERSON, Circuit Judges.
Opinion for the Court filed by Circuit Judge RUTH B. GINSBURG.
The named plaintiffs represent participants in terminated pension plans covered by the plan termination insurance program Congress prescribed in Title IV of the Employee Retirement Income Security Act of 1974 (ERISA). The plans in which plaintiffs participated had not been amended prior to termination to reflect the mandatory vesting provisions set out in ERISA Title I. See 29 U.S.C. § 1053(a). At the time their plans terminated, plaintiffs, based on their years of service, satisfied ERISA's minimum vesting requirements, but they did not meet the unlawful, more restrictive conditions for vesting still contained in their unamended plans.
The Pension Benefit Guaranty Corporation (PBGC), charged with administering the Act's plan termination insurance, refused to guarantee plaintiffs' benefits, because the class members did not have "nonforfeitable benefits ... under the terms of a plan." ERISA § 4022(a), 29 U.S.C. § 1322(a) (1976). The plaintiffs challenged the PBGC's construction of that critical language, and the district court granted summary judgment for the PBGC. We hold that the district court erred in its interpretation of the operative provision, ERISA § 4022(a), 29 U.S.C. § 1322(a) (1976). Accordingly, we reverse the summary disposition against plaintiffs and instruct reinstatement of the case.
Congress designed ERISA to safeguard employees against the loss of anticipated retirement benefits, following decades of service, occasioned by (1) overly restrictive age and service vesting conditions, and (2) the absence of insurance protection when plans terminated with insufficient funds to cover vested benefits. See 29 U.S.C. § 1001(a).
Title I of the Act attends to Congress' determination to outlaw excessively restrictive prerequisites to vesting. That first Title of ERISA requires pension plans covered by the Act to provide for pre-retirement vesting determined by years of service, in compliance with minimum vesting standards set out in the statute; regardless of age, the longest term an employee may be required to work before vesting commences is 10 years. See id. § 1053(a). For pension plans in existence on January 1, 1974, ERISA's minimum vesting requirements became effective for plan years beginning after December 31, 1975; for post-January 1, 1974 plans, ERISA's vesting standards became effective immediately, i.e., for plan years beginning after September 2, 1974, the date of ERISA's enactment. Id. § 1061(a), (b). As of those dates, plan vesting terms more restrictive than ERISA's minimum vesting standards became invalid under Title I. While provisions less generous than the ERISA minimum vesting standards are unlawful, plans may adopt more generous vesting schedules.
ERISA-qualified plans must be "maintained pursuant to a written instrument," and the plan document must specify the criteria for entitlement to benefits. Civil actions to enforce Title I's prescriptions may be brought by plan participants or by the Secretary of Labor; appropriate relief in such actions includes amendment of a plan to delete an unlawful vesting term. ERISA § 502(a), 29 U.S.C. § 1132(a).
Backing up ERISA's funding requirements, see 29 U.S.C. § 1082, and key to the congressional plan, Title IV establishes an insurance program to meet the problem of plans terminated without assets sufficient to cover vested benefits. As administrator of the guaranteed benefits program, the PBGC is "to provide for the timely and uninterrupted payment of pension benefits [within specified dollar limitations] to participants and beneficiaries under plans [covered by Title IV]" and "to maintain premiums ... at the lowest level consistent with carrying out its obligations under [Title IV]." Id. § 1302(a). The Secretary of Labor chairs the PBGC's three-member Board of Directors, which is completed by the Secretaries of Treasury and Commerce. Id. § 1302(d).
As enacted in 1974, ERISA § 4022(a) stated the scope of the PBGC's guarantee as follows:
Subject to the limitations contained in subsection (b), the corporation shall guarantee the payment of all nonforfeitable benefits ... under the terms of a plan which terminates [while covered by ERISA].
29 U.S.C. § 1322(a) (1976) (emphasis added). A vested benefit is one that is nonforfeitable. The PBGC had construed the words "nonforfeitable benefits ... under the terms of a plan" to mean that plan restrictions, although outlawed under Title I, could nonetheless hold sway to block guaranteed benefits under Title IV. To foreclose the PBGC's reading, Congress, in 1980, amended ERISA to provide insurance coverage, unequivocally, for "all nonforfeitable benefits." 29 U.S.C. § 1322(a) (1980). Congress defined "nonforfeitable benefit" to include "a benefit for which a participant has satisfied the conditions for entitlement under the plan or the requirements of this chapter." Multiemployer Pension Plan Amendments Act of 1980, Pub.L. No. 96-364, 94 Stat. 1208 (1980), codified at 29 U.S.C. §§ 1301(a)(8), 1322(a) (emphasis added). Introduced as technical amendments, the 1980 alterations were not made retroactive.
When a plan terminates with insufficient funds to cover its liability for benefits, the PBGC seeks appointment of a trustee, in practice, the Corporation itself, to collect the plan's assets and pay guaranteed benefits. 29 U.S.C. § 1342. The PBGC can recover deficiencies from the employer, subject to a cap of 30 percent of the employer's net worth. Id. § 1362. Any remaining gap between the plan's assets and guaranteed benefits is paid from insurance premiums charged to all covered ongoing plans. See id. § 1361.
Although ERISA's minimum vesting standards became effective as of the dates fixed in the Act, see supra p. 1311, formal implementation was not instantly mandated. See id. § 1030(a). For tax qualification purposes, plans could defer adopting amendments in line with the minimum standards until the end of the 1976 plan year or "such later time as the Secretary [of Treasury] may designate." Internal Revenue Code § 401(b). The Internal Revenue Service (IRS), which administers pension plan qualification for special, favorable tax treatment, several times permitted companies to postpone filing ERISA-conforming plan amendments. Eventually, the IRS set December 31, 1977 as the final deadline for filing the required amendments. See Information Release 1833 (Sept. 13, 1977), reprinted in 155 Pension Reporter (BNA) at A-1 (Sept. 19, 1977).
Not inconsistent with the unhurried pace set by the IRS for plan amendments conforming to ERISA, the Secretary of Labor issued regulations on the Act's disclosure requirements. See 29 U.S.C. § 1022. To guide plan sponsors, the Department of Labor offered a Model Notice. For plans not yet amended, the Department recommended informing participants that their plan
has NOT been amended to meet these [vesting] standards yet. ERISA requires that [the plan] apply the new standards to the plan year starting on [the start of the 1976 plan year]. But ERISA does not require the plan to make amendments by [that date]. The amendments may come later. When they are made, they must be applied back to [the start of the 1976 plan year].
29 C.F.R. § 2520.104b-5(c) (emphasis in original).
The companies that employed the class members in this action terminated their retirement plans after ERISA's vesting standards and insurance provisions became effective. The plans in question had not been amended prior to termination, however, to reflect ERISA's vesting schedules. At least in the cases of the named plaintiffs, participants had been informed of the new regime by notices that closely tracked the language of the Model Notice.
The M & M Transportation Co. unamended plan, in which named plaintiff Mary Collins had participated, afforded a vested right to retirement benefits at age 65 only if the participant both reached age 55 while When Collins and Page sought the PBGC's guarantee, 1 each received a letter from a PBGC staff member denying insurance coverage. Applying the age 55 requirement despite its illegality under Title I, the PBGC's staff concluded that Collins and Page had not met the standard of the original (pre-1980) ERISA § 4022(a), the provision in effect when the M & M and Federal's plans terminated. Under that standard, staff observed, only benefits "nonforfeitable ... under the terms of a plan" were guaranteed. The letter from the PBGC explained to Page:
[297 U.S.App.D.C. 31] employed by the company and had at least 10 years of credited service. Before Collins turned 55, M & M declared bankruptcy. Although Collins had worked for M & M for more than 32 years, the age-while-employed requirement prevented her from gaining a vested right under the written terms of M & M's plan. The Federal's Inc. unamended plan, in which named plaintiff Estella Page had participated, included 10 years-of-service and age 55 requirements identical to M & M's. When Federal's closed shop and terminated its plan, Page, like Collins, had...To continue reading
Request your trial
-
Lewis v. Pension Benefit Guaranty Corp.
...deference to the Corporation's interpretation of the ERISA provision at issue, as expressed in its amicus brief); Page v. PBGC, 968 F.2d 1310, 1313–14 (D.C. Cir. 1992) ("Our initial question, as instructed by the Supreme Court's 1984 leading decision in Chevron, is whether Congress had a sp......
-
Pension Ben. Guar. Corp. v. Republic Technologies
...B. The Pension Benefit Guaranty Corporation Subchapter III is the "key to the congressional plan," Page v. Pension Benefit Guaranty Corp., 968 F.2d 1310, 1311 (D.C.Cir.1992) (Ginsburg, J.), designed "to guarantee that `if a worker has been promised a defined pension benefit upon retirement—......
-
Pension Benefit Guaranty Corp. v. Ky. Bancshares, Inc.
...plans. See 29 U.S.C. §§ 1301 –1461.Subchapter 3 is the “key to the congressional plan,” Page v. Pension Benefit Guaranty Corp., 968 F.2d 1310, 1311 (D.C.Cir.1992), designed to guarantee that “if a worker has been promised a defined pension benefit upon retirement-and if he has fulfilled wha......
-
Vanderkam v. Pension Benefit Guar. Corp.
...at 651–52, 110 S.Ct. 2668;Mead Corp. v. Tilley, 490 U.S. 714, 722, 109 S.Ct. 2156, 104 L.Ed.2d 796 (1989)); see also Page v. PBGC, 968 F.2d 1310, 1315 (D.C.Cir.1992) (applying Chevron deference to PBGC's interpretation of ERISA's statutory provisions). Moreover, our Court of Appeals has hel......