Opinion ID: 441965
Heading Depth: 3
Heading Rank: 1

Heading: Prevention of Employer Abuse

Text: 74 The PBGC argues, as it did in promulgating its phase-in rule, that the basic purpose of the phase-in provision--to prevent employers from abusing the protections of ERISA by increasing unfunded plan terminations in anticipation of termination--would be easily circumvented by too narrow a construction. For example, the PBGC argues, an employer anticipating plan termination could amend its pension plan to provide for vesting of all benefits after only one year of service, thus sharply increasing the number of participants entitled to benefits that would be nonforfeitable ... under the terms of the plan and guaranteed by the PBGC. 75 The district court found that the basic purpose of the phase-in provision was indeed to prevent ballooning of benefits in anticipation of termination. 48 The PBGC has consistently taken this position, and we agree with this understanding of the purpose of phasing in recent plan amendments. We are, furthermore, persuaded that voluntary plan amendments--those that exceed the requirements of Title I--do implicate the possibility of employer abuse of just the sort that the phase-in limitation was designed to thwart. It was thus reasonable, in light of the ambiguity of Congress' intent on this precise point, for the PBGC to construe the statutory phase-in limitation to extend to voluntary plan amendments that do not increase the dollar amount of monthly benefits under the plan. 76 However, the PBGC does not seriously argue that mandatory vesting amendments such as the one involved in this case present any risk of abuse. It would be absurd to suggest that employers could abuse the guarantee provisions of ERISA by making plan improvements required by Congress itself after years of deliberation over the weaknesses of private pension plans. Thus, while we uphold the PBGC's decision to phase in voluntary vesting amendments in general, and thus the PBGC's regulation implementing this decision, we do so on a basis that provides no support whatsoever for the phase-in of mandatory plan amendments. The additional policy arguments advanced by the PBGC in favor of its phase-in of plan improvements other than increased monthly benefits, to the extent they support the phase-in of voluntary plan improvements, provide no support for the phase-in of mandatory plan improvements. 77