Where an employee accrues benefits under a pension plan based on his or her years of service, ERISA's anti-kickback rule prohibits the reduction of an employee's benefits through or because of an amendment of the plan. The Sixth Circuit's recent decision in Fallin v. Commonwealth Industries, Inc. Cash Balance Plan, N0 09-5139 (August 23, 2012).
Donald Curley had worked for Commonwealth Industries for more than five years but was not yet 55 when Commonwealth converted in 1998 its pension plan from from a defined-benefit pension plan to a cash-balance plan. Under Commonwealth's defined-benefit plan employees that retired early having completed five years of service and reached 55 would receive subsidized benefits, nearly the same as if they were 65. After the plan's conversion, Corley retired and received a lump-sum payout of benefits. Curley claimed he was not paid the full amount of benefits due him, but the district court disagreed and granted judgment for Commonwealth Industries.
The Sixth Circuit ruled that any reduction in Corley's benefits would violate ERISA's anti-kickback rule at 29 U.S.C. 1054(g). While Corley was not yet 55 when the plan was changed, he had met the five years of service requirement. The anti-kickback rule barred reduction of Corley's benefits even if he reached the minimum age (55) requirement after the plan was converted. Accordingly, the Sixth Circuit reversed and remanded the case for a determination of how much benefits was owed Corley.