Voluntary Separation Pay Plan and ERISA Status

[Brian Haynes]

A client wants to establish a collectively bargained voluntary separation plan and I am concerned that it may be considered a pension plan under ERISA since Fort Halifax will not apply. The client is a college and wants to provide a one-time lump-sum payment to an employee who voluntarily terminates employment after 20 years of service and between the age of 55 and 62. If the employee is involuntarily terminated then no benefit is paid. I feel pretty good that the voluntary vs involuntary distinction is ok under Fort Halifax since there is not a "for cause" determination. However, I am concerned that the time period for which the payment is offered is problematic since it will be in a collective bargaining agreement that will last for 3 years. I could provide a window say of 30 days in each of the 3 years but I am not sure that helps enough. I would appreciate any ideas. Thanks. I am aware of the 409A and 457(f) issues.

[jpod]

I would be concerned about relying on Fr. Halifax. As I recall that was a pre-emption case involving a state law requiring plant closing benefits or the like, and the court reasoned that it was not an employer-established or-maintained "plan" because no administration was required. I think some administration is required here, because you have to keep track of ages and service years.

If it is an ERISA plan, it sounds like a pension plan to me - not a welfare plan.

[Everett Moreland]

Are you comfortable that setting age 62 as the upper age is consistent with the ADEA?