*The U.S. Equal Employment Opportunity Commission*

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EEOC NOTICE
Number 915.002 
Date 5/11/95


1.     SUBJECT: Questions and Answers About Disability and Service 
Retirement Plans Under the ADA

2.     PURPOSE:     EEOC has received a large number of 
discrimination charges and many informal inquiries concerning the 
application of the Americans with Disabilities Act (ADA) to 
disability and service retirement plans.  The following questions and
answers provide guidance to EEOC field offices on some issues that 
have been raised in this area.

3.     EFFECTIVE DATE:     Upon issuance.

4.     EXPIRATION DATE:     As an exception to EEOC Order 205.001, 
Appendix B, Attachment 4, � a(5), this Notice will remain in effect 
until rescinded or superseded.

5.     ORIGINATOR:     ADEA Division, Office of Legal Counsel.

6.     INSTRUCTIONS:     File after "Definition of Disability," in 
the 900 Series of Volume II of the Compliance Manual.

7.     QUESTIONS AND ANSWERS

     A.   Q.   What is the difference between a disability retirement 
plan and a service retirement plan?

          A.   A disability retirement plan provides a lifetime 
income for an employee who becomes unable to work because of illness 
or injury, without regard to the employee's age.  A service 
retirement plan provides a lifetime income to employees who have 
reached a minimum age stated in the plan (most commonly age 60 or age
65) and/or who have completed specified years of service with the 
employer.

     B.   Q.   Is it a violation of the ADA if an employer offers 
only a service retirement plan and does not offer a disability 
retirement plan?

          A.   Nothing in the ADA requires an employer to provide a 
disability retirement plan, whether or not the employer offers a 
service retirement plan.  Where an employer offers only a service 
retirement plan, there is no ADA violation as long as the service 
retirement plan treats persons who are covered by the ADA the same
as other employees. 

     C.   Q.   If an employer provides a disability retirement plan, 
is it permissible under the ADA for that plan to provide lower levels 
of benefits than the same employer's service retirement plan?  Lower 
benefit levels may take different forms. 

For example:  

          *    a service retirement plan might enable any employee 
with 20 or more years of service to retire with an annuity equal to 
50% of the individual's highest annual compensation.  But, the 
disability retirement plan, payable when illness or injury prevents 
the individual from continuing work, might provide an annuity equal
only to 45% of the individual's highest annual compensation; 

          *    service retirees might receive periodic increases (for 
example, based on inflation or an increased return on invested 
pension funds) while disability retirees remain at a fixed benefit 
level; 

          *    a service retirement plan might disregard outside 
earnings while a disability retirement plan contains an outside 
earnings offset provision.

          A.   None of these examples would violate the ADA under any 
theory of discrimination.  The ADA does not require that service 
retirement plans and disability retirement plans provide the same 
level of benefits, because they are two separate benefits which serve 
different purposes.

     D.   Q.   Why don't differences in the plans cited above 
constitute discrimination against a qualified individual with a 
disability?

          A.   There is no disability discrimination because none of 
the plans make distinctions based on whether or not an individual is 
covered under the ADA.  Thus, in the first example, the service 
retirement plan is available to all employees who have attained 20 or 
more years of service, without regard to the presence or absence of
a disability.  A qualified individual with a disability who works 20 
or more years receives the same service retirement benefit as a 
person not covered by the ADA who works 20 or more years.  Similarly, 
the disability retirement plan is available to everyone who becomes 
unable to work because of illness or injury.  Therefore, the
employer does not violate the ADA simply by providing different 
benefits under service and disability retirement plans.

     E.   Q.   What types of plans offering disability retirement or 
service retirement benefits would violate the ADA?

          A.   Violations will occur under either type of plan when 
the employer treats a qualified individual with a disability less 
favorably because of that individual's disability or when an employer 
denies persons covered by the ADA access to a plan which would be 
available to persons not covered by the ADA.  Some examples are:

          *    persons covered by the ADA who qualify for both a 
service retirement and disability retirement plan are required to 
take a disability benefit which is less advantageous; 

          *    an employer requires persons covered by the ADA to 
serve 25 years to obtain a service retirement benefit, while persons 
not covered by the ADA are eligible for service retirement after 20 
years;

          *    persons covered by the ADA when hired are eligible for 
disability retirement protection after 5 years on the job, while 
persons not covered by the ADA when hired are eligible for disability 
retirement protection after 1 year on the job;

          *    persons covered by the ADA who take disability 
retirement are provided a benefit equal to 33% of their highest 
annual compensation, while all others are eligible for a disability 
retirement benefit equal to 50% of their highest annual compensation;

          *    persons covered by the ADA who earn a service 
retirement benefit are given a cost of living increase every third 
year of retirement, while all other service retirees receive an 
annual cost of living increase;

          *    an employer excludes from the disability retirement 
plan an employee who otherwise meets the plan's criteria but who has 
a particular disability (such as insulin-dependent diabetes or 
paraplegia.)

When the Commission is confronted with such disability 
discrimination, it will seek relief for the aggrieved persons unless 
the employer shows that it did not act on the basis of disability or 
proves that the plan is sheltered by the ADA's defense for
certain bona fide employee benefit plans.  See � 501(c) of the ADA.  
The reach of that defense is beyond the scope of these questions and 
answers.

For additional guidance on these issues, contact the Office of Legal 
Counsel's Attorney-of-the-Day at 202-663-4691.







_______________________       ______________________________________
Date                          Gilbert F. Casellas
                              Chairman
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*This page was last modified on July 6, 2000.*

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