Vesting Cutback Conundrum

[Christine Roberts]

Must a provision allowing for 100% vesting upon disability be retained in a plan restatement for all participants in the plan as of the restatement date? Or only those participants who have 3 years of service at time of restatement and who elect to retain the old vesting schedule?

Presume the following: Paired MPP Plan and PSP provide for 100% vesting upon disability.

MPP plan is merged into PSP, and PSP restated, effective January 1, 2000. Disabiliity vesting provision is NOT carried over to restated PSP.

Participant with fewer than 3 years of service at time of merger and restatement is injured in 1999 and injury results in disabiility during 2000, after effective date of restatement eliminating 100% vesting upon disability.

Participant terminates in 2000 and demands 100% vesting due to disability.

Any comments appreciated.

[rcline46]

The disability benefit would fall under a benefit, right or feature and you cannot take it away. Anyone in the plan at the time of restatement would retain the right to 100% vesting on disability.