Opinion ID: 172426
Heading Depth: 1
Heading Rank: 9

Heading: Retirement-Type Subsidy?

Text: The phrase retirement-type subsidy, though employed in the anti-cutback provision, is not otherwise defined in ERISA. In Steiner Corp. Retirement Plan v. Johnson & Higgins of Cal., 31 F.3d 935 (10th Cir.1994), this court concluded, after examining the legislative history of ERISA, that the term subsidy, as employed in the phrase retirement-type subsidy, refers to a benefit that `continu[es] after retirement,' and thus does not include a lump sump payment payable in full to an employee upon retirement. Id. at 940 (quoting S.Rep. No. 575, 98th Cong., 2d Sess. 30, reprinted in 1984 U.S.C.C.A.N. 2547, 2576). The legislative history referred to by this court in Steiner states, in pertinent part, as follows: The bill provides that the term `retirement-type subsidy' is to be defined by Treasury regulations. The Committee intends that under these regulations, a subsidy that continues after retirement is generally to be considered a retirement-type subsidy. The Committee expects, however, that a qualified disability benefit, a medical benefit, a social security supplement, a death benefit (including life insurance), or a plant shutdown benefit (that does not continue after retirement age) will not be considered a retirement-type subsidy. S.Rep. No. 98-575, at 30 (1984), reprinted in 1984 U.S.C.C.A.N. 2547, 2576 (emphasis added). Although the district court did not cite to Steiner, it took specific note of the above-quoted legislative history and concluded, on the basis thereof, that Congress did not intend to include death benefits within the definition of `retirement-type subsidies.' App. at 1209. Plaintiffs indirectly attack this conclusion by arguing that a post- Steiner regulation adopted by the Secretary of the Treasury on August 12, 2005 [5] has effectively overruled Steiner 's interpretation of the phrase retirement-type subsidy. That regulation, 26 C.F.R. § 1.411(d)-3(g)(6)(iv), defines the phrase retirement-type subsidy to mean the excess, if any, of the actuarial present value of a retirement-type benefit over the actuarial present value of the accrued benefit commencing at normal retirement age or at actual commencement date, if later, with both such actuarial present values determined as of the date the retirement-type benefit commences. Examples of retirement-type subsidies include a subsidized early retirement benefit and a subsidized qualified joint and survivor annuity. 26 C.F.R. §§ 1.411(d)-3(g)(6)(iv) (2008). In turn, the Secretary of the Treasury, in the same post- Steiner regulation, has defined the phrase retirement-type benefit to mean (A) [t]he payment of a distribution alternative with respect to an accrued benefit; or (B) [t]he payment of any other benefit under a defined benefit plan ... that is permitted to be in a qualified pension plan, continues after retirement, and is not an ancillary benefit. 26 C.F.R. § 1.411(d)-3(g)(6)(iii). Lastly, the phrase defined benefit plan is defined under ERISA to mean a pension plan other than an individual account plan.... 29 U.S.C. § 1002(35). Notably, the district court expressly acknowledged this post- Steiner regulatory definition of retirement-type subsidy in its order granting summary judgment in favor of defendants. After quoting the regulatory definition, the district court noted that the plaintiffs had include[d] the ... definition in a footnote, but d[id] not explain how it applie[d] to the facts of this case. App. at 1209 (citing Response, at 20 n. 13). The district court ultimately concluded that [t]he plaintiffs' argument [wa]s conclusory and inadequately developed. Id. More specifically, the district court concluded that plaintiffs had fail[ed] to provide any evidence to demonstrate that the Pensioner Death Benefit fits into the Department of Treasury's definition (or any other definition) of a retirement-type subsidy, and in particular they fail[ed] to create a material fact dispute regarding whether the Pensioner Death Benefit [wa]s a retirement-type subsidy subject to ERISA's anti-cutback provision. Id. Although plaintiffs continue to cite the post- Steiner regulatory definition of retirement-type subsidy in their opening appellate brief, they have again failed to provide any substantive explanation as to why the Pensioner Death Benefit fits within this regulatory definition. Instead, they simply assert, in conclusory fashion, that this clarifying definition should be applied to the facts of this case and the DLS Equivalent declared to be a bona fide retirement-type subsidy. Aplt. Br. at 29. We therefore reject, as inadequately briefed, plaintiffs' argument that the DLS Equivalent constitutes a retirement-type subsidy. See generally Gross v. Burggraf Constr. Co., 53 F.3d 1531, 1547 (10th Cir. 1995) (holding that issues not adequately briefed will not be considered on appeal). Even if we were to overlook the shortcomings in the plaintiffs' appellate brief, we would readily conclude that the DLS Equivalent does not constitute a retirement-type subsidy for purposes of ERISA's anti-cutback provision. To begin with, nothing in the Treasury's post- Steiner definitional regulation undercuts, and indeed could not undercut, the relevant legislative history of the anti-cutback provision cited in Steiner, which clearly suggests that the term subsidy was intended to refer to benefits that continue over a period of time following retirement. In other words, the holding in Steiner that lump sum payments do not qualify as a retirement-type subsidy remains valid, notwithstanding promulgation of the Treasury's definitional regulation. And, applying Steiner 's holding to the facts of this case, it is indisputable that the DLS Equivalent does not continue over a period of time following retirement, but rather is a one-time payment. Further, the DLS Equivalent does not fall within the Treasury's definition of retirement-type subsidy because it does not qualify as a retirement-type benefit. Although the DLS Equivalent could arguably be called a distribution alternative to the normal method of payment of the Pensioner Death Benefit, the Pensioner Death Benefit itself does not qualify as an accrued benefit under ERISA. At the time the DLS Equivalent was created (in 1997), the 1993 Pension Plan (the plan then in place) expressly defined the term accrued benefit to exclude any death benefits, including the DLS Equivalent. Thus, a person reading the 1993 Plan, as amended in 1997, could not reasonably conclude that the DLS Equivalent relate[d] to an accrued benefit by paying out an accumulated amount of accrued benefits. In re Lucent, 541 F.3d 250, 255 (3d Cir.2008). Moreover, as the term accrued itself suggests, [a]n accrued benefit under ERISA represents the interest in a retirement benefit that a participant earns each year.... Ashenbaugh v. Crucible Inc., 1975 Salaried Ret. Plan, 854 F.2d 1516, 1524 (3d Cir.1988) (quotation omitted). In this case, it is undisputed that neither the Pensioner Death Benefit in general, nor the DLS Equivalent in particular, accrue in any fashion with an employee's years of service. Thus, neither can reasonably be deemed an accrued benefit for purposes of ERISA.