Compliance September 29, 2015

EEOC Charges Fire Company with Age Discrimination

The agency accuses the fire company and several Long Island towns and villages with preventing older workers from earning credits toward a pension-like program.
Reported by

The U.S. Equal Employment Opportunity Commission (EEOC) alleges that the Glenwood Fire Company, along with several towns and villages in Long Island, New York, have discriminated against older firefighters from accruing credits toward a pension-like plan.

The “length of service award program” (LOSAP), similar to a retirement pension, was created by the towns of North Hempstead and Oyster Bay and the villages of Old Brookville and Roslyn Harbor. The plan unlawfully prohibits volunteer firefighters from accruing service credits after they turn 55.

EEOC argues that the Glenwood LOSAP violates the Age Discrimination in Employment Act (ADEA), a federal law that protects workers ages 40 or older from age discrimination.

EEOC filed suit in U.S. District Court for the Eastern District of New York, after first attempting to reach a pre-litigation settlement through its conciliation process with the municipalities and the fire company.

The suit seeks to fix the LOSAP, award all service credit earned regardless of age, and pay the affected firefighters or their beneficiaries all retroactive and future benefits earned.

Adela Santos, the EEOC trial attorney on the case, says, “The Glenwood LOSAP blatantly penalizes older firefighters who have continued to be active members of the fire company.”

Get more!  Sign up for PLANSPONSOR newsletters.

Other fire districts in New York have previously settled similar charges with the EEOC.

Ask the Experts September 29, 2015

(b)lines Ask the Experts – Must a Frozen 401(a) DB Plan Be Terminated?

“I read with great interest your Ask the Experts Q&A on frozen plans, since our organization has a frozen Employee Retirement Income Security Act (ERISA) 401(a) plan as well.
Reported by

“However, in our case, it is a defined benefit plan, not a defined contribution plan. Does this change your response at all with respect to plan termination?” 

Michael A. Webb, vice president, Cammack Retirement Group, answers:  

Never miss a story — sign up for PLANSPONSOR newsletters to keep up on the latest retirement plan benefits news.

All of the elements of our response to the previous question regarding 401(a) defined contribution plans would apply to defined benefit (DB) plans as well. However, due to funding and other concerns, DB plans that are subject to ERISA can be more difficult to terminate, which is why it is not uncommon to see frozen DB plans remain frozen for long periods of time prior to termination.

Specifically, frozen DB plans often do not have sufficient assets to pay out benefits to all participants, which is required when a plan is terminated. What occurs on many occasions is that the plan sponsor attempts to fund the asset shortfall over several years, and then terminate the plan when it is fully funded in what is called a standard termination.

In addition there are some ongoing administrative obligations which are unique to frozen ERISA DB plans, such as the payment of Pension Benefit Guarantee Corporation (PBGC) premiums, recognition of the plan on the sponsoring employer’s balance sheet, and satisfaction of minimum funding requirements. For an excellent assessment of all of the issues associated with freezing and terminating defined benefit plans, this article certainly fits the bill. As an aside, you may recognize one of the authors!

Thank you for your question!

 

NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.

«