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Pension and Employee Benefits: Code, ERISA, & Regulations
Authoritative and comprehensive reference to pension and selected welfare benefit provisions of the I.R.C., ERISA and the associated regulatory authority.
Former pension plan participants may not claim a breach of fiduciary duty solely on the basis of alleged oral misrepresentations that purported to alter plan terms, according to the U.S. Court of Appeals in New York City (CA-2) in Ladouceur v. Credit Lyonnais. Oral promises cannot vary the terms of an ERISA plan.
Merger's effect on pensions
Upon the merger of the participants' long-time employer with its parent company, the participants (now direct employees of the parent company) met with the parent's HR director to discuss the merger's effect on their pension benefits. According to the participants, the HR director stated that the employer would use their employment start dates with the merged subsidiary when calculating vesting periods in order to determine their pension benefits. Several months later, having left the parent company, the participants were dismayed to learn that benefits would be based instead upon their recent start date with the parent company.
The participants filed suit, alleging, among other things, breach of fiduciary duty under ERISA. The district court awarded summary judgment to the parent company; the participants appealed.
No oral alteration
The appellate court rejected the participants' claim. Oral promises are unenforceable under ERISA and therefore cannot vary the terms of an ERISA plan. To allege a breach of fiduciary duty based on a statement altering the terms of the plan, the statement must be contained in a written document. The participants offered no such document into evidence.
For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.
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