Opinion ID: 441966
Heading Depth: 2
Heading Rank: 2

Heading: The Hourly Plan and the CREEP Provision

Text: 20 Unfortunately for plaintiffs Piech and McBride, the pension plan amendment adopted in July, 1975, improving vesting provisions to comply with ERISA, was not to become effective until the plan year beginning October 1, 1976. As we have noted, this effective date complied fully with the requirements of ERISA, which demanded that plans be in compliance for the first plan year beginning after January 1, 1976, but it fell several months after the plan's termination. On the date of termination, these plaintiffs more than met the continuous service requirements of their plan's vesting provisions, but fell just short of the age requirements. Thus, plaintiffs Piech and McBride would be vested under the terms of their plan, as required in order to qualify for the guarantees of ERISA, only if we accepted their argument that the CREEP provision of the plan should be construed so as to add two years to their age, thus lifting them over the minimum age requirement of the plan. Unfortunately, we cannot construe the CREEP provision in the manner suggested by plaintiffs. 21 First, as the district court correctly observed, the termination of all employees in connection with a permanent cessation of business does not easily fit within the term furlough, which appears to contemplate a temporary separation from employment. Furthermore, the provision is clearly designated, both by its text and by the heading under which it appears, as an element in the determination of continuous service, not age, which is an independent requirement for vesting under the plan. The provision thus appears to be designed primarily to permit participants to bridge temporary gaps in employment due to layoffs or furlough for purposes of a calculating continuous service. We are unable to construe the CREEP provision as an all-purpose bonus of two years, permitting all employees to vest two years earlier than they otherwise would under the terms of the plan. 22 The PBGC advances an additional argument based on the importance within ERISA of assessing a participant's status under the terms of the plan on the termination date. We need not consider that argument, for the terms of the plan itself, including the CREEP provision, clearly do not serve the plaintiffs' purposes. In spite of each plaintiff's four decades of service to this company, they had no vested rights to pension benefits under the terms of their plan, and thus no right to guaranteed benefits under ERISA. The pathetic predicament of these plaintiffs, we acknowledge with deep regret, illustrates sharply the kind of tragedy ERISA was designed to alleviate. But inevitably ERISA and its remedial vesting provisions must have an effective date, and plaintiffs like these who clearly fall on the wrong side of that effective date are doomed to suffer from the sorry state of many private pension plans before ERISA was enacted. We affirm the judgment of the district court as to plaintiffs Piech and McBride. 23