Opinion ID: 507220
Heading Depth: 3
Heading Rank: 1

Heading: Accrued Benefit

Text: 6 [FORMULA 1] 7 The Monthly Accrued Benefit as of any date of determination on or subsequent to a Participant's Normal Retirement Date 5 shall be an amount equal to: 8 (a) 15% of the first $650 of a Participant's Average Monthly Earnings at such date of determination plus 20% of such earnings in excess of $650, multiplied by 9 (b) a fraction, not to exceed 1, the numerator of which is the total number of years of Credited Service 6 completed by a Participant and the denominator of which shall be twenty (20). 10 [FORMULA 2] 11 The Monthly Accrued Benefit as of any determination date prior to a Participant's Normal Retirement Date shall be equal to: 12 (a) the amount of the Participant's Monthly Accrued Benefit which would have become payable at his Normal Retirement Date had he continued in the employ of the Employer and had he continued to earn a monthly salary or wage in the same amount as his Average Monthly Earnings, multiplied by, 13 (b) a fraction, not to exceed 1, the numerator of which is the total years of Credited Service completed by the Participant as of the date of determination, and the denominator of which is the number of years of Credited Service he would have completed had he continued in employment to his Normal Retirement Date. 14 (emphasis supplied). Hereafter we refer to the two formulas as Formula 1 and Formula 2, respectively. 15 Blessitt contends that Formula 1 should have been applied as if he had worked until normal retirement age because this is the retirement benefit he expected to receive when he retired and that Dixie Engine therefore was entitled to a reversion of only those plan assets remaining after all benefits were calculated under his interpretation of Formula 1. 7 Dixie Engine applied Formula 2 to calculate the benefits of all employees who had not reached normal retirement age (65) on the termination date. 8 The parties agree that Blessitt is entitled to the Formula 2 amount; the disputed benefit amount is the difference between the Formula 2 amount and the amount Blessitt seeks. In monetary terms, the Formula 2 amount determined by Dixie Engine is approximately 38% of the amount Blessitt seeks. 16 In terms of legal significance, the difference between the two formulas as applied by the parties is that under Blessitt's application of Formula 1, he would receive credit for his anticipated future employment with Dixie Engine, which encompasses a period of approximately eighteen years. The issue before us is whether Blessitt has a legitimate, enforceable claim to benefits based on these eighteen years of anticipated future service which he did not actually work. Put another way, we must determine whether such benefits constitute plan liabilities that must be satisfied from plan assets prior to any reversion of residuary assets to the employer upon termination of a defined benefit plan funded entirely by employer contributions. As indicated in the analysis which follows, the statutes themselves, authoritative interpretations by the regulatory agencies, the caselaw, and policy considerations all point ineluctably to the conclusion that Blessitt's position is untenable. 17