Multiemployer Plan Participants Allege Rehabilitation Plan Violates ERISA and PPA

Bakery Union

The Bakery and Confectionery Union and Industry International Pension Fund violated federal benefits law when it adopted a rehabilitation plan which prevents former covered employees from “aging into” vested benefits as previously permitted under the plan, a class of participants in the plan have alleged in a complaint filed in federal district court in New York (Tagliareni v. Bakery &  Confectionary Union &  Indus. Int'l Pension Fund Pension Plan, S.D.N.Y., No. 7:15-cv-00171-UA, complaint filed 1/9/15).
The complaint, filed on Jan. 9 in the U.S. District Court for the Southern District of New York, challenged the rehabilitation plan instituted by the multiemployer defined benefit plan's trustees pursuant to the Pension Protection Act on the grounds that the plan effectively amended the plan in a way that has already been ruled to violate the anti-cutback provisions of the Employee Retirement Income Security Act by the U.S. Court of Appeals for the Second Circuit (Alcantara v. Bakery &  Confectionery Union &  Indus. Int'l Pension Fund Pension Plan, 751 F.3d 71 (2d Cir. 2014).
According to the complaint, the trustees of the plan violated the requirements of the PPA and ERISA when they declared the plan to be in critical status and filed the rehabilitation plan canceling the ability of employees who were no longer performing covered service to “age into” full vested benefits under the plan when the sum of their age or service credit reached 80 or 90.
Counsel for the plan didn't respond to Bloomberg BNA's request for comment.
Previous Plan Amendment Blocked 
The rehabilitation plan provision challenged in the complaint acts in the same manner as a previous amendment to the plan that had been deemed to violate ERISA Section 204(g), which prohibits reduction of vested benefits by plan amendment.
According to the complaint, prior to 2010, a participant who retired before meeting the preconditions for the plan's “Golden 80” and “Golden 90” benefits could become eligible for those benefits after retirement, when his or her age and years of service added up to 80 or 90, respectively.
The contested amendment eliminated this ability.
The participants filed a series of lawsuits in 2011 and 2012, which were all transferred to the U.S. District Court for the Southern District of New York and all alleged that this amendment violated ERISA's anti-cutback rule.
In April 2012, Judge Vincent L. Briccetti concluded that the contested amendment violated the anti-cutback rule and entered judgment in favor of the participants.
On May 1, 2014, the Second Circuit affirmed the district court's ruling, finding that the amendment improperly reduced a vested benefit in violation of ERISA.

Excerpted from a story that ran in Pension & Benefits Daily (01/16/2015).

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