US District Judge Jennifer Coffman of the US District Court for the Western District of Kentucky ruled that the administrator of the Southern Graphic Systems Inc. Pension Plan properly relied on the plan documents which she said were unambiguous and included an early retirement provision, BNA reported.

Coffman said the administrator’s prior calculation error that did not include the reduction was irrelevant since the new calculation method was consistent with the plan’s language. The court noted that the change in calculation methods did not constitute an amendment that would require the administrator to provide a plan summary to the participants.

The former employees were participants in the Southern Graphic Systems Inc. Pension Plan that provided disability retirement benefits. The former employees alleged that for at least 15 years, the plan consistently calculated benefits without applying a reduction for early retirement, the court said.

In 2001, the plan began reducing benefits based on the participants’ early retirement leaving the former employees with a smaller benefits award than expected. The company argued that the previous benefits had omitted the early retirement reduction and had been calculated incorrectly and so it had to alter its calculation method to comply with the plan.

The ex-workers then filed a lawsuit alleging:

• the plan acted arbitrarily in applying the reduction to calculate the benefits,
• the new interpretation resulted in a reduction of accrued benefits,
• the plan failed to provide notice of the reduction, and
• the company failed to properly amend the plan to reflect the new method of calculation.

Rejecting the former employees’ argument that a change in interpretation of the plan constituted a “de facto amendment,” Coffman said this case did not involve interpretation because the plan was unambiguous.

The case is Koebel v. Southern Graphic Systems Inc. Pension Plan, W.D. Ky., No. 05-149-C10/12/05.