Opinion ID: 3035704
Heading Depth: 3
Heading Rank: 1

Heading: Is the Pensioner Death Benefit a Welfare

Text: Benefit or a Pension Benefit? ERISA defines pension and welfare benefits as follows: Except as provided in subparagraph (B), the terms “employee pension benefit plan” and “pension plan” mean any plan, fund, or program which was 9 heretofore or is hereafter established or maintained by an employer or by an employee organization, or by both, to the extent that by its express terms or as a result of surrounding circumstances such plan, fund, or program—
employees, or
employees for periods extending to the termination of covered employment or beyond, regardless of the method of calculating the contributions made to the plan, the method of calculating the benefits under the plan or the method of distributing benefits from the plan. A distribution from a plan, fund, or program shall not be treated as made in a form other than retirement income or as a distribution prior to termination of covered employment solely because such distribution is made to an employee who has attained age 62 and who is not separated from employment at the time of such distribution. 29 U.S.C. § 1002(2)(A). In contrast: The terms “employee welfare benefit plan” and 10 “welfare plan” mean any plan, fund, or program which was heretofore or is hereafter established or maintained by an employer or by an employee organization, or by both, to the extent that such plan, fund, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, (A) medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or u n e m p l o ym e n t , o r v a c a t io n b e n e f i t s , apprenticeship or other training programs, or day care centers, scholarship funds, or prepaid legal services, or (B) any benefit described in section 186(c) of this title (other than pensions on retirement or death, and insurance to provide such pensions). Id. § 1002(1) (emphasis added). “ERISA’s framework ensures that employee benefit plans be governed by written documents and summary plan descriptions, which are the statutorily established means of informing participants and beneficiaries of the terms of their plan and its benefits.” Unisys, 58 F.3d at 902. We therefore look to the plan documents to interpret plan obligations. See id. Extra-ERISA commitments (such as vested welfare benefits) must be found in the plan documents and stated in clear and express language. Id. The written terms of a plan control and 11 employers may not modify or supersede them orally. Id. When a plan is clear and unambiguous, a court must determine its meaning as a matter of law without looking to extrinsic evidence. Skinner, 188 F.3d at 138, 145. The pensioner death benefit neither provides retirement income to employees nor results in a deferral of income by employees. See 29 U.S.C. § 1002(2)(A) (defining pension plan); see also Oatway v. American Int’l Group, Inc., 325 F.3d 184, 189 (3d Cir. 2003) (concluding that a plan that was not “created for the purpose of providing retirement income” was not a pension plan). Moreover, it could not be an accrued pension benefit since it is not “an annual benefit” and it does not “commenc[e] at normal retirement age.” See 29 U.S.C. § 1002(23); see generally Bencivenga v. W. Pa. Teamsters & Employers Pension Fund, 763 F.2d 574, 577 (3d Cir. 1985) (discussing accrued pension benefits). Nor does the pensioner death benefit directly relate to an accrued benefit by paying out an accumulated amount of accrued benefits. See, e.g., West v. AK Steel Corp., 484 F.3d 395, 410–11 (6th Cir. 2007). Instead, the pensioner death benefit provides “benefits in the event of . . . death.” See 29 U.S.C. § 1002(1) (defining a welfare plan). This fits readily within the definition of a welfare benefit. As the Second Circuit Court of Appeals has explained, the fact that a welfare benefit appears in a larger plan that also provides pension benefits does not change the character of that welfare benefit. See Rombach v. Nestle USA, Inc., 211 F.3d 190, 193–94 (2d Cir. 2000) (discussing McBarron v. S & T 12 Indus. Inc., 771 F.2d 94 (6th Cir. 1985)). As in Rombach, the “meaning and function” of the pensioner death benefit “remain[] clear” despite surrounding benefits or the use of the word “Pensioner” to describe the benefit. See id. at 194. The 1996 plan language thus identifies the plan as a welfare benefit plan to the extent that it provides the pensioner death benefit. See generally 29 U.S.C. § 1002(1). Nothing in the Summary Plan Descriptions distributed by Lucent suggests otherwise. See Burstein, 334 F.3d at 378 (explaining that “where a summary plan description conflicts with the plan language, it is the summary plan description that will control”). The pensioners focus on the following Plan Description language: The Plan is classified as both a pension plan and a welfare plan under the Employee Retirement Income Security Act of 1974, as amended (ERISA). It is a defined benefit pension plan for service and deferred vested pension purposes and for the payment of certain sickness death benefits upon the death of a participant under the pension provisions of the Plan. The Plan is a “welfare plan” for purposes of providing disability pensions and certain other death benefits payments. This passage does not state that the pensioner death benefit is a pension benefit. It merely says, in general terms, that some 13 death benefits are pension benefits and others are welfare benefits. Regardless whether the other death benefits in the plan (the “Accident Death Benefit,” and the “Sickness Death Benefit,” see 1996 Plan Art. 5.2–5.3) are pension benefits, the pensioner death benefit is a welfare benefit and this language in the Plan Description does not change that. Nor does the asserted fact that the pensioner death benefit has characteristics “consistent with” or “not inconsistent with” a pension benefit change its character. The amount and calculation method of the pensioner death benefit, the identity of the recipient of payment, and the treatment of the pensioner death benefit for tax, accounting, and plan termination purposes, are relevant details for administrators of the plan, but they do not change the fundamental character of the benefit. The type of benefit provided, not other considerations, determines whether a plan is a pension plan or a welfare plan. Indeed, the statutory definition of pension plans specifically states that a plan providing the relevant type of benefits is a pension plan “regardless of the method of calculating the contributions made to the plan, the method of calculating the benefits under the plan or the method of distributing benefits from the plan.” 29 U.S.C. § 1002(2)(A). We accordingly will not give weight to these factors in the face of the unambiguous provision of welfare benefits rather than pension benefits. Any claimed reliance on a belief that the pensioner death benefit is a pension benefit also is irrelevant to the character of the pensioner death benefit. The pensioners identify no 14 authority stating that such detrimental reliance has significance under the facts of this case. The Lucent plan thus is a welfare plan to the extent that it provides for the pensioner death benefit at issue in this case. No ambiguity in the plan prohibits us from reaching this legal conclusion since the plan language is not “subject to reasonable alternative interpretations.” Taylor v. Cont’l Group Change in Control Severance Pay Plan, 933 F.2d 1227, 1232 (3d Cir. 1991); see also In re New Valley Corp., 89 F.3d 143, 149 (3d Cir. 1996) (stating that the existence of ambiguity is a question of law).