Opinion ID: 441965
Heading Depth: 3
Heading Rank: 3

Heading: Unintended Influence on Structure of Plans

Text: 82 The PBGC contends that including only amendments increasing monthly benefits in the phase-in limitation would create a financial incentive for employers to amend their plans in that way rather than in other ways not covered by the limitation, thus influencing plan structures in a manner not intended by Congress. The PBGC argues as follows: 83 Under Section 4062 of ERISA, 29 U.S.C. Sec. 1362, an employer that maintained a terminated pension plan covered by Title IV would be liable to the PBGC for the amount by which a plan's assets were insufficient to provide guaranteed benefits. Thus, an employer's financial interest is served if the PBGC guarantees are limited. Recognizing this, an employer might well favor amendments improving plan benefits that are subject to phase-in rather than others perhaps more appropriate, that are not. 84 Brief for Appellee at 28. The PBGC argues that the plaintiffs' narrow construction would thus tend to affect the structure of pension plans in a manner not anticipated and not intended by Congress. 85 This argument not only seems somewhat far-fetched, but it is flatly inconsistent with the PBGC's argument, which we accept, that the purpose of preventing employer abuse supports the phase-in of all (voluntary) plan amendments improving benefits. That argument assumes that, given a narrow phase-in rule, employers facing plan termination would be tempted to balloon benefits in ways not covered by phase-in, thus increasing the extent of the PBGC's liability. The PBGC cannot logically maintain at the same time that a narrow phase-in rule would lead employers to provide new benefits in ways that are covered by phase-in so as to limit their potential liability. 86 Even if the argument were not irreconcilable with the PBGC's primary argument for a comprehensive phase-in rule, it would have no force as to mandatory plan amendments. An employer wishing to limit its financial exposure by preferring plan amendments subject to phase-in is nevertheless required by law to institute the minimum vesting standards of Title I. Exemption of those mandatory amendments from the phase-in rule could thus have no effect not intended by Congress on the structure of pension plans. 87