Compliance December 14, 2005

Employee Not Eligible for Early Retirement Benefits After Resignation

December 14, 2005 (PLANSPONSOR.com) - The US District Court for the Northern District of Mississippi has ruled that a voluntary early retirement plan sponsor was correct in denying benefits to an employee who terminated six weeks prior to the plan's adoption.
Reported by

According to the court, Patsy Fowlkes informed Schering-Plough in November 2002 that she intended to leave the company.   Schering-Plough asked Fowlkes to continue working until June 11, 2003.   Fowlkes was age 49 when she left the company and turned age 50 later in 2003.

The company announced the new voluntary early retirement program six weeks after Fowlkes left.   According to plan provisions, employees who were age 50 or older during 2003 with at least five years of vesting service would be credited with an additional five years of service and five years of age for pension purposes.   The plan was later amended to specify that any employee who terminated employment with the company in 2003 would not be eligible to participate in the early retirement program unless he or she was eligible for either a normal (age 65) or early (age 55) retirement under Schering-Plough’s pension plan.

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

Fowlkes applied for benefits under the early retirement program, but was denied because she was not eligible for early retirement when she left the company.   Fowlkes sued the employer alleging that the denial was arbitrary and capricious in violation of the Employee Retirement Income Security Act (ERISA).

The court granted summary judgment in favor of Schering-Plough, noting that it was undisputed that Fowlkes was not age 55 when she left the company.   Additionally, the court said a finding for Fowlkes would contradict the intention of the plan of inducing active employees to retire early.

The case is Fowlkes v. Schering-Plough Corp. Voluntary Early Retirement Program, N.D. Miss., No. 1:05CV14-P-D, 11/29/05.

Compliance December 13, 2005

UAW Support Secured for House Pension Reform Bill

December 13, 2005 (PLANSPONSOR.com) - House Education & the Workforce Committee Chairman John Boehner (R-Ohio) and Ways & Means Committee Chairman Bill Thomas (R-California) today announced an agreement with the United Auto Workers (UAW) on two modest changes to the transition rules governing benefit restrictions included in the Pension Protection Act.
Reported by

In their joint  statement , Boehner and Thomas said, “This morning, we reached an agreement with the United Auto   Workers that will secure their active support for House passage of the Pension Protection Act.”

According to the statement, “This agreement addresses their concerns on benefit restrictions and shutdown benefits and remains consistent with the bill’s overall balanced approach of protecting worker and retiree pension assets while not forcing employers out of the defined benefit pension system our bill aims to strengthen.”

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

The statement says the House is expected to pass the bill before it adjourns this year.

The bill, introduced in June, was passed by the Education & the Workforce Committee on June 30, and by the Ways & Means Committee in November (See  US House Pension Reform Measure Approved by Key Committee).

The Profit Sharing/401(k) Council of America strongly supports the House bill due to key DC plan provisions included in the measure (See   PSCA Pushes for DC Provisions in House Pension Reform).

Provisions of the Pension Protection Act (HR 2830) can be viewed  here .  

«