Questions Presented
Whether a cost-of-living adjustment that a defined benefit pension plan has the discretion to provide to participants who elect to receive their benefits as a monthly annuity payment and that is explicitly excluded from the plan’s definition of “accrued benefit” nevertheless constitutes part of every participant’s “accrued benefit” under ERISA, 29 U.S.C. § 1002(23)(A), and therefore must also be provided to participants who select a one-time lump-sum distribution of their benefits.
Case Updates
Cert. petition denied
March 17, 2008
U.S. Chamber urges Supreme Court to review cost of living adjustments in defined benefit plans under ERISA
February 08, 2008
NCLC urged the Supreme Court to review a Seventh Circuit decision holding that a cost-of-living adjustment (“COLA”) that a defined benefit plan has discretion to provide to participants who elect to receive monthly annuities constitutes a per se accrued benefit under ERISA, and therefore must also be provided to participants who choose to receive their benefits in a one-time lump-sum distribution. In its brief, NCLC argued that the Seventh Circuit’s decision undermines sound retirement policy by encouraging lump-sum distributions over annuity payments, and increases the risk that employers will choose not to offer COLA’s because of the new and unanticipated financial obligations on plan sponsors.