Court Opinion

ID: 9473536
Source: CourtListenerOpinion
Date Created: 2023-08-05 04:32:28.804686+00
Date Added: 2024-06-11T17:43:35.278953
License: Public Domain

STAPLETON, Circuit Judge,
concurring.
I conclude that the challenged amendment violates neither Mr. Bencivenga’s rights under ERISA nor his rights under the Western Pennsylvania Teamsters and Employers Pension Plan. I write separately because I reach this conclusion by a route different from that taken by my colleagues.
As Chief Judge Aldisert has persuasively demonstrated, the text of ERISA, its legislative history, and the case law construing it all support the proposition that an early retirement benefit is not an “accrued benefit” directly protected from reduction by Section 204(g). 29 U.S.C. § 1054(g).
As I read Treasury Regulation § 1.411(d)-3(b) (1977), it does not conflict with this clearly expressed intention of Congress. The key to any understanding of this regulation in the present context is recognition of the fact that changes in actuarial factors for determining early retirement benefits are mentioned as one example of changes which may indirectly affect the accrued benefit of a participant. If an early retirement benefit were an accrued benefit, a change in an actuarial factor used to determine that benefit would obviously affect it directly. For this reason, I think it much more likely that the last sentence of the regulation refers to situations in which, under the terms of a particular plan, a change in an early retirement benefit formula has an indirect and adverse effect on benefits to be received at normal retirement age and on the accrual of rights therein.1
Since an early retirement benefit is not an accrued benefit under ERISA, it follows that the challenged amendment does not violate Section 204(g) of that statute.
The remaining question presented by this appeal is whether the alteration of Mr. Bencivenga’s early retirement benefit breached his contract rights under the Plan. This Court has held that employees and their employer may bargain for benefits beyond those required to satisfy ERISA and that, when they do so, employees may enforce their rights to those benefits in the federal courts. Murphy v. Heppenstall Co., 635 F.2d 233 (3d Cir.1980), cert. denied, 459 U.S. 1142, 102 S.Ct. 999, 71 L.Ed.2d 293 (1982). I, accordingly, turn to the issue of whether the Plan conferred upon Mr. Bencivenga protection against any reduction in the amount of his early pension benefit. I conclude that it does not.
Section 10.4 of the Plan stipulates that the “provisions of ... [the] Plan may be amended, as provided in the Trust Agreement, at any time by an instrument in writing executed by the Trustees.” Section 10.7 of the Trust Agreement provides that the “Plan may be amended at any time by an instrument iii writing executed by the Trustees, provided, however, in no event shall the Pension Fund be used for any other purpose other than the purposes set forth in ... [the] Trust Agreement and the ... Plan, and for the purposes of paying the necessary expenses incurred in the administration of the Pension Fund.” The governing documents contain no further qualifications on the right of the Trustees to amend the Plan.2
Mr. Bencivenga reads Article III of the Plan to foreclose amendments which would *582occasion a reduction in the amount of early retirement benefits. In his view, that Article characterizes the right of a participant in Mr. Bencivenga’s position to an early retirement benefit as a “nonforfeitable” or “vested” right and this means not subject to elimination or change. Section 3.2 and 3.3 of Article III, prior to the challenged amendment, provided as follows:
Section 3.2 Eligibility. A Participant will have a nonforfeitable right to a pension benefit, as provided in Article IV and subject to the conditions required therein, if he has completed ten (10) Years of Participation since his last Break in Service Date.

Section 3.3. Amount of Pension.

(a) Notwithstanding anything in Section 3.2 to the contrary, the monthly amount of the Normal Vested Pension Benefit commencing at the date which would have been the Participant’s Normal Retirement Age if he had not incurred a Break in Service, shall be equal to the product of (i) the “unit multiplier” as specified in Appendix A and (ii) the Participant’s Credited Service, both factors to be determined as of his Termination Date.
(b) The monthly amount of the Early Vested Pension Benefit shall equal the monthly amount of the Normal Vested Pension Benefit reduced one-third (Vs) of one (1) percent for each month that the early retirement date precedes age sixty.
Sections 4.2 through 4.4 of the referenced Article IV provided in part as follows:
Section 4-2. Conditions for Normal Retirement Benefit. Any Participant who attains his Normal Retirement Age, as defined in Section 4.1(a) of this Pension Plan, and has completed ten (10) Years of Participation since his last Break in Service Date, may retire and shall be entitled to receive a pension under this Pension Plan.
Section 4-3. Conditions for Early Pension Benefit. Any Participant who has at least fifteen (15) years of Credited Service, of which at least five (5) years are of Future Credited Service, may retire early upon the attainment of age fifty-five and shall be entitled to receive a pension under this Pension Plan.

Section 4-4■ Amount of Pension.

(a) Normal Pension Benefit: The monthly amount of Normal Pension granted a retiring Participant eligible for such benefit under the provisions of Section 4.2, shall equal the product of (i) the “unit multiplier” determined in accordance with Appendix A and (ii) the Credited Service, both factors to be determined as of the Normal Retirement Pension beginning date defined in Section 4.5(a).
(b) Early Pension Benefit: The monthly amount of Early Pension granted a retiring Participant eligible for such benefit under the provisions of Section 4.3, shall equal the product of (i) the “unit multiplier” and (ii) the Credited Service period of such Participant, both factors to be determined as of the Early Retirement Pension beginning date defined in Section 4.5(b), with such product to be reduced one-third (V3) of one (1) percent for each month that the Early Retirement Date precedes age sixty.
Chief Judge Aldisert finds Mr. Bencivenga’s Article III argument unpersuasive because the amendment came before Mr. Bencivenga attained the age of 55 and became entitled to actually receive pension payments. In his view, Mr. Bencivenga’s right did not become “nonforfeitable” under Article III of the Plan until he met this final “condition” of entitlement under Article IV. I agree that the “pension benefit” to which Section 3.2 confers a “nonforfeitable right” following ten years of participation is subject to the conditions found in Article IV. I cannot agree, however, that the right to such a pension benefit does not become “nonforfeitable” within the meaning of Section 3.2 until a participant attains the age when pension payments are to commence. First, I think it fair to assume that the phrase “nonforfeitable right” in a pension plan governed by ERISA is used as a term of art in the same way it is used in the statute and, as used in ERISA, nonfor*583feitable rights are acquired before one becomes entitled to immediate payment of a pension benefit. Section 3(19), 29 U.S.C. § 1002(19), defines a “nonforfeitable” right as including an unconditional and legally enforceable right to a “deferred benefit”, as well as to an “immediate” benefit, and Section 203(a)(3)(A), provides that a “right to an accrued benefit derived from employer contributions shall not be treated as forfeitable solely because the plan provides that it is not payable if the participant dies.” 29 U.S.C. § 1053.
Second, at least one purpose of the concepts of a “nonforfeitable right” in Section 3.2 and of a “Normal Vested Pension Benefit” and an “Early Vested Pension Benefit” in Section 3.3 is to provide protection for those who are laid off or change jobs before attaining an age at which retirement is an option.3 The amounts of the normal and early “vested” pension benefits are tied, for example, to the participant’s “Termination Date”, a phrase which is defined as “the date upon which a Participant terminates his service in Covered Employment for any reason other than by death, disability or retirement.” If this is a purpose of Sections 3.2 and 3.3, it could not have been intended that the right to an early or normal pension benefit would not become “nonforfeitable” or “vested” until a participant reached the ages of 55 and 60 respectively.
I thus conclude that Mr. Bencivenga’s right to an early retirement pension benefit was “nonforfeitable” within the meaning of Article III when the trustees adopted Amendment 9 to the Plan. The question for decision then becomes whether, under the Plan as properly construed, the “nonforfeitable” character of this right means that the amount of the benefit could not be reduced by amendment.
As a matter of contract interpretation, I perceive no basis for concluding that the amendment provisions of Article X of the Plan do not apply, pursuant to their literal terms, to the provisions of Article III as well as to all other segments of the Plan. While some courts have held on public policy grounds that vested pension benefits cannot be altered pursuant to a reserved right of amendment, the public policy which governs here is that expressed in ERISA. Section 402(b) of that Act, 29 U.S.C. § 1102(b), requires that “[e]very employee benefit plan shall ... provide for a procedure for amending such plan____” The ability thus afforded to adjust to changed circumstances is limited, however, by Section 204(g) and other provisions which expressly restrict use of the power of amendment4 as well as by the right of the parties to negotiate limitations on that power. It is not for this Court to alter the balance thus struck in the name of public policy.

. Under Section 3(22), "the term ‘normal retirement benefit’ means the greater of the early retirement benefit under the plan, or the benefit under the plan commencing at normal retirement age." 29 U.S.C. § 1002(22). Under Section 204, the minimum rate of accrual of "accrued benefits" may be a function of the "normal retirement benefit" under the plan. 29 U.S.C. § 1054. In any plan in which a formula for "accrued benefits” includes the "normal retirement benefit", a reduction in the early retirement benefit may indirectly and adversely effect "accrued benefits.”

. ERISA does not require that a plan provide protection of accrued benefits against amendment. Indeed, amendments which reduce accrued benefits are permissible if approved by the Secretary. 29 U.S.C. §§ 1054(g) and 1082(c)(8).

. The summary of the Plan distributed to participants contains the following explanation of vesting:
"Vesting" is the right to receive a future pension benefit (early or normal, subject to meeting the other conditions for these benefits) if you leave the Fund. You become vested in your pension benefits after completing 10 Years of Participation.

. For example, as Chief Judge Aldisert notes, Section 206(a) of ERISA, 29 U.S.C. § 1056(a), would foreclose an amendment which reduced Mr. Bencivenga’s early retirement benefit to an amount less than the amount of his benefit at normal retirement age actuarily reduced to reflect his early receipt of benefits. The undisputed facts of record in this case show that the challenged amendment did not have this effect. It also may be, as the trial judge suggested, that the Trustees are limited under ERISA, to utilization of the power of amendment in a "reasonable” and "non-arbitrary” manner. See 29 U.S.C. § 1104(a). I agree with the trial judge, however, that the undisputed facts of record demonstrate that the Trustees met these standards.