Opinion ID: 441965
Heading Depth: 3
Heading Rank: 2

Heading: Unequal Treatment of New Plans and Newly-Vested Benefits

Text: 78 In its final rulemaking, the PBGC contended that the phase-in of only increased monthly benefits would result in inequality of treatment between participants in new plans and those in existing plans. According to the agency, [i]t would be inequitable to provide on [sic] immediate and full guarantee of the benefits to which the participant in the existing plan has just become entitled while not doing so for the participant in the new plan. 49 79 We seriously question the logic of this argument as applied to vesting improvements generally. It is clear to us that an employee who has participated in and contributed to a pension plan for many years has a much stronger and more reasonable expectation of eventually receiving benefits under the plan--even if the plan has had inadequate vesting provisions--than does an employee whose employer only recently instituted a pension plan. But whatever reservations we may have as to the validity of this argument with respect to vesting improvements generally, we believe it offers no support for the phase-in of mandatory vesting benefits. Congress saw fit to leave wholly unregulated the decision of whether to have a pension plan, yet it instituted strict requirements as to what provisions any such plan must include. This congressional decision recognizes the expectations that employees understandably develop on the basis of the mere existence of a pension plan, even apart from its technicalities. In light of that decision, it is certainly no unwarranted inequality of treatment to phase-in all benefits under new plans but to grant the immediate and full protection of the minimum vesting standards to employees under plans that have been in existence, and consequently have given rise to legitimate employee expectations, for many years. 80 The PBGC's two publicly articulated reasons for its broad phase-in of plan amendments improving benefits thus provide no support whatsoever for the application of that rule to the legally distinct and significant subset of plan amendments required by the minimum vesting standards of ERISA. It is evident that the phase-in of mandatory vesting improvements implicates not only unique issues of statutory construction, as we have seen, but also unique policy considerations. We now turn to the remaining policy arguments advanced by the PBGC in support of its decision. 81