Can we remove "Suspension of Benefits" provisions?

[ERISA-Bubs]

We are terminating a Pension Plan.  The insurance company we are using to purchase annuities to pay benefits doesn't like our "suspension of benefits" provision.  the provision allows Participants in pay status to suspend benefits for any month during which the employee works at least 80 hours (service, as defined in ERISA Section 203(a)(3)(B)).

Can we remove that provision to make the insurance company happy?  Or is this some sort of protected benefit?

Thank you!

[Effen]

That is odd that they have concerns.  That is a standard provision in almost every plan (except the 80 is typically 40).  No idea why they would have a problem with it, but also no problem if you want to remove it.  Now that the plan is terminated, I don't know why the sponsor would care anymore about retirees returning to work, but if it is a union shop, the union might have a concern. 

 

[Luke Bailey]

I guess their thought is that if it's not amended out, then technically the annuity contracts don't track the plan provisions exactly. I think a lot of times the issue is probably not raised and there's an assumption that by terminating the plan and buying annuities in effect the suspension of benefits provision is amended out.

[CuseFan]

SoBs are a pain to administer, which is likely the reason the insurance company wants it out, to make its life easier. Employer shouldn't care anymore, as noted, and there is no prohibition on removing - it's one of those easier to take out than to put it provisions.

[Draper55]

If you have an SOB provision but do not give out the notices do you not have the same effect as removing it? It is as you suggested difficult to put in with regard to previous accruals. If you leave it in, you may have the option of applying it prospectively for an HCE which could be desirable in circumstances such as HCE is at the 415 comp limit post NRA and you do not want to put the HCE into receipt.