Disability benefits that comply with the ADEA

[Everett Moreland]

I represent local government defined benefit plans that want to change their disability benefit to compy with the ADEA. The disability benefit in these plans is determined by projecting service to normal retirement age, which according to the EEOC and the 9th Circuit (Arnett v. CALPERS) violates the ADEA. Two disability benefits that comply with the ADEA are (1) a benefit of x% (usually 50%) of final average salary and (2) the benefit accrued to date, with no actuarial reduction for starting before normal retirement age. Please post suggestions about any other disability benefits that comply with the ADEA.

[Guest Brian4]

You did not say whether or not the local goverment employees are covered by social security. Assuming the employees are covered by social security, then one suggestion is to use the social security supplement exception. This would provide a temporary benefit, ending when the participant reached retirement age. The temporary benefit could be in addition to one of the benefits described in the posting. The benefit could be calculated by a formula, and limited by the social security benefit. The social security benefit limit is based on the unreduced retirement age benefit, i.e., payable at age 65 to 67, depending on year of birth.