retroactive amendment to increase benefit formula

[jane murray]

plan sponsor amends plans benefit formula effective january 1, 2014 to increase benefits from 2% to 2.25% x years of benefit credit. the plan was rewritten at the time and the benefit formula in the new plan doc is equal to 2.25% of avg. comp. times yrs. of ben. srvc. it appears the new formula applies to yrs. of ben. srvc. for years prior to 2014? the plan does not specifically say that the formula only applies to years after january 1, 2014. also does the more generous benefit formula apply to terminated participants that have yet to be paid but severed employment prior to 2014?

[Effen]

The amendment should have been written clear enough to answer your question. Generally benefit increases do not apply to participants who terminated before the effective date of the amendment, but it isn't unheard of to give benefit increases to terminated participants, especially in a bargained situation.

If you think the current wording is ambiguous, you might want to clarify things with administrative interpretation memo for the file.

You would hope they didn't amend this in a vacuum. Someone probably did studies so they knew how this change would impact the cost. Check the communications and cost studies to see what they thought they were doing, then make sure the wording in the plan matches their intentions.