Opinion ID: 553359
Heading Depth: 1
Heading Rank: 3

Heading: The Deferred Compensation Plan

Text: 17 The protections flowing from vesting under ERISA apply only to a pension plan. Pension plan and employee pension benefit plan are defined as: 18 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 by its express terms or as a result of surrounding circumstances such plan, fund, or program-- 19 (i) provides retirement income to employees, or 20 (ii) results in a deferral of income by employees for periods extending to the termination of covered employment or beyond, 21 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. 22 29 U.S.C. Sec. 1002(2)(A). 23 The Deferred Compensation Plan is financed through contributions made by Nationwide on the agent's behalf to a group annuity fund. The contribution for each agent is based upon a percentage of the original and renewal fees which he has earned. The agent is eligible to participate in the plan after completion of five years of service. A plan participant may elect to receive early reduced deferred compensation benefits at his termination upon reaching age 50 with the percentage of benefits payable gradually increasing up to age 60. Benefits are paid over a period of three to ten years or as a life annuity. 24 Darden elected to have his benefits paid in the form of a life annuity. At the time of his termination in 1980, Darden had accumulated deferred compensation incentive credits totalling $28,664.56. These credits were to be deferred until Darden's 60th birthday on June 1, 1994, when lifetime monthly payments would commence on the basis of annuity rates then in effect. The monthly amount would have been approximately $205. 25 Based on these facts, the district court concluded that Nationwide's Deferred Compensation Plan provides retirement income to employees and is an employee pension benefit plan under ERISA. Nationwide disagrees, contending that the Deferred Compensation Plan was not intended to serve as a pension plan but that it was designed to offer an incentive to agents during their working careers. For that reason, Nationwide points out, the plan disproportionately reward[s] those persons who generate more sales and therefore earn greater commissions. 26 We agree with the district court that the Deferred Compensation Plan represented an ERISA pension plan, which provided retirement income to employees or resulted in the deferral of income extending beyond the termination of employment. 2 Nationwide represented that the Deferred Compensation Plan was a retirement plan. Nationwide's own witnesses acknowledged that one of the purposes of the Plan was to provide retirement benefits and its audio-visual suggested the same. Darden, like other Nationwide agents, considered the payments as part of their retirement scheme. 3