Benefits December 28, 2010

Wide Support Seen for Later Retirement Age

December 28, 2010 (PLANSPONSOR.com) – Seventy-one percent of those participating in a recent poll believe Baby Boomers should be encouraged to work past normal retirement age.
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A news release about the survey conducted by the Marist College Institute for Public Opinion said 69% of Americans – including 71% of Gen-Xers and 61% of Millennials – say they have a responsibility to provide for those who retire before them.

The greatest concerns of Baby Boomers – 77 million Americans born between January 1, 1946, and December 31, 1964 – about life after 65 are finances (48%) and health (34%).

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According to the news release, 61% worry that Baby Boomers will bankrupt Social Security, while 59% believe the needs of aging Boomers may overload the healthcare system.

Younger generations diverge from their elders in some key areas. Thirty-one percent of Millennials feel that Boomers should be encouraged to retire, versus 8% of the Silent-Greatest generation and 16% of Boomers themselves. Likewise, 37% of Millennials believe they should bear no responsibility to provide for retirees.

The report details the findings from a telephone survey taken between December 2 and December 8, 2010, of 1,029 adults in the continental U.S.

Compliance December 28, 2010

Court Finds Severance Plans Not ERISA Governed

December 28, 2010 (PLANSPONSOR.com) – A federal judge in Massachusetts has ruled that Alcatel-Lucent USA did not breach its Employee Retirement Income Security Act (ERISA) fiduciary duties through its severance plan disclosures to four workers.
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U.S. District Judge Patti B. Saris of the U.S. District Court for the District of Massachusetts ruled that the severance program was not part of an ERISA-governed plan.

Saris found that severance benefits under the Lucent Career Transition Option Program (LCTOP) and a separate union-negotiated agreement were not ERISA governed because both were one-time cash benefits that did not require ongoing administration. Saris also pointed out, however, that the two severance plans amended the company’s ERISA-governed pension plan.

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The employees alleged in their ERISA lawsuit that Alcatel-Lucent breached its ERISA fiduciary duties by not telling them that they would have received a greater amount of LCTOP benefits if they were involuntarily terminated by the company instead of voluntarily leaving the company.

The lawsuit was filed in 2008 by a group of former employees of Lucent’s Merrimack Valley Works manufacturing facility in North Andover, Massachusetts who had been represented by the Communications Workers of America (CWA). According to the lawsuit, the company began a workforce reduction in 2000 and 2001. To help convince workers to leave the company of their own accord, Lucent offered the LCTOP, a lump-sum payment of $30,500. Lucent later worked out an agreement with the CWA setting up two additional levels of benefits under the LCTOP – an “enhanced LCTOP” that increased the maximum lump-sum payment to $40,000 and a second new level giving benefits to involuntarily laid-off workers.  According to the ruling, it was the second level of benefits aimed at those who were involuntarily laid off that provided the greatest amount of benefits.

The court found that even if Alcatel-Lucent breached its fiduciary duties, the breach did not harm the four plaintiffs who left the company voluntarily because they would have done so under the LCTOP regardless of any enhancements that were given to employees who were involuntarily terminated by the company.

The case is Arivella v. Alcatel-Lucent, D. Mass., No. 08-CV-01398-PBS.

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