Which Plan Doc Applies

[Guest jfreeborn]

I was always under the impression that the plan document in effect on the participant's last hour of covered service (usually when they terminate employment) is the version of the plan that governs the participant. Recently, I was challenged on this. Other party says its the document that was in effect when the employee started...and the more favorable one that was instituted while employee was working at company does not apply. I disagree, but can't find the statutory provision to justify my position...after citing that many many times. Anyone know?

[SoCalActuary]

For private employers, the issue is always based on the last document, plus any amendments that are applied retroactively by the plan sponsor (like cost-of-living adjustments made ad-hoc).

But each of those documents must have protections for the accrued benefit rights before the amended document.

For public employers, the courts take a more protective position that you cannot take away the projected plan benefits that were offered when you first joined the plan. [in my political opinion, this is based on the self-protective instincts of judges who want to avoid any precedent that could hurt their own benefits.] If you increase a benefit formula lawfully, then those benefit provisions are also ratched up permanently, never to be reduced.

So, what type of plan sponsor are you discussing?

[Guest jfreeborn]

For private employers, the issue is always based on the last document, plus any amendments that are applied retroactively by the plan sponsor (like cost-of-living adjustments made ad-hoc).

But each of those documents must have protections for the accrued benefit rights before the amended document.

For public employers, the courts take a more protective position that you cannot take away the projected plan benefits that were offered when you first joined the plan. [in my political opinion, this is based on the self-protective instincts of judges who want to avoid any precedent that could hurt their own benefits.] If you increase a benefit formula lawfully, then those benefit provisions are also ratched up permanently, never to be reduced.

So, what type of plan sponsor are you discussing?

I should have been more clear. Its a private company. Someone told me the whole thing is based on contract theory. I just can't believe there is nothig in ERISA that says which document should apply to participants.

[SoCalActuary]

For private employers, the issue is always based on the last document, plus any amendments that are applied retroactively by the plan sponsor (like cost-of-living adjustments made ad-hoc).

But each of those documents must have protections for the accrued benefit rights before the amended document.

For public employers, the courts take a more protective position that you cannot take away the projected plan benefits that were offered when you first joined the plan. [in my political opinion, this is based on the self-protective instincts of judges who want to avoid any precedent that could hurt their own benefits.] If you increase a benefit formula lawfully, then those benefit provisions are also ratched up permanently, never to be reduced.

So, what type of plan sponsor are you discussing?

I should have been more clear. Its a private company. Someone told me the whole thing is based on contract theory. I just can't believe there is nothig in ERISA that says which document should apply to participants.

Contract theory? State law-based? Discuss with them the concepts of ERISA pre-emption and 411 rules. Someone can claim that certain benefits must be provided under their employment contract, but that does not require the ERISA-qualified plan to provide such benefits.

[david rigby]

Sound like a good reason to require a plan document to be in writing.