A Must-Read for Benefits Lawyers

All benefits lawyers who do plan drafting or review plan documents will want to carefully read and digest this opinion written by Seventh Circuit Judge Richard Posner: “Call, et al. v. American Management Pension Plan.” It seems to me that the results of the case hinged on the questionable placement of the phrase “except as otherwise permitted by law and applicable regulations” in an anti-cutback provision of the plan document.

To learn more about the anti-cutback language IRS requires to be included in a plan which was the focus of the lawsuit and the opinion, see the Alert Guidelines Form 5623:

If the early retirement benefits or other optional retirement benefits are changed by an amendment, are the benefits with respect to the benefits accrued to the date of the amendment not reduced for any employee who at any time on or after the amendment satisfied the pre-amendment conditions for the benefit except as provided under the regulations?

Also, the Plan Administrator’s Firestone-related discretionary authority did not “save the day” because Judge Posner said in the opinion that there was no ambiguity in plan language which would have triggered the use of such discretion:

Just as unambiguous terms of a statute leave no room for the agency that administers the statute to exercise interpretive discretion, National Cable & Telecommunications Ass?n v. Brand X Internet Services, 125 S. Ct. 2688, 2700 (2005), so unambiguous terms of a pension plan leave no room for the exercise of interpretive discretion by the plan?s administrator, or at least not enough to carry the day for the administrator in this case.