Opinion ID: 2604
Heading Depth: 2
Heading Rank: 3

Heading: Termination of the 1991 Plan

Text: In 1997, Alco was renamed IKON Office Solutions, Inc. (IKON). In 2000, the IKON Board of Directors decided to terminate the 1991 Plan on the grounds of unfavorable interest rates and declining participation. Paneccasio and other participants of the 1991 Plan were notified in October 2000 of the pending termination, which became effective on December 31, 2000. In accordance with the termination provision, participants who were receiving monthly benefits would receive a lump sum Acceleration of Benefits, essentially the present value of future benefits payments. Participants who were not yet receiving monthly benefits (including Paneccasio), whether or not vested, would receive a lump sum repayment of deferrals plus six percent interest. All participants would lose any continuing claim to the life insurance benefits. At the time of termination, Paneccasio was approximately six months shy of his 65th birthday and therefore had not yet commenced receiving benefits under the 1991 Plan. As a result, he was informed he would receive a lump sum termination benefit of $75,419.22, composed of $46,283.25 in deferrals plus $29,135.97 in interest. By letter to IKON dated November 10, 2000, Paneccasio: expressed his belief that because he was 65 percent vested in the 1991 Plan under the ERP, he was entitled to reject the termination lump sum payment; claimed that the ERP modified the 1991 Plan so that it could not be terminated as to him; and demanded benefits under the original terms of the 1991 Plan, i.e., (1) the $9,750 annuity beginning at age 65 and continuing for 10 years, and (2) the life insurance benefit of a post-age 65 cash value of $61,750 and death benefit of $243,750. These are the benefits in dispute in this lawsuit. IKON, through the Plan Administrator, W.J. Hope, Jr., responded on November 30, 2000 that Paneccasio had no option other than to take the lump sum payment described in the termination provision because [v]esting does not supercede the termination provisions found in Section 19... of the Plan. On December 15, 2000, Paneccasio appealed this denial of benefits, and Hope referred the matter to IKON's Retirement Plans Committee for review. On July 3, 2001, Paneccasio's appeal was denied, and he was entitled to receive his termination payment of $75,419.22.