The law of benefits
is a difficult channel, which requires careful sailing, or rude boats.
A plan amendment that retroactively (i) eliminates or reduces an early retirement benefit or a retirement-type subsidy (as defined in regulations), or (ii) eliminates an optional form of benefit
is treated as reducing accrued benefits.
The normal form of benefit
distribution under the cash-balance program is, by law, an annuity.
In fact, more than 67 percent of benefit
managers of large corporations have stated that they will reduce benefits over the next few years to mitigate their FAS 106 liability.
However, the court found a prohibited reduction, by interpreting "rate of benefit
accrual" to mean the rate at which the participant's accrued benefit, as defined in Sec.
Relation of Benefit
to Salary Prior to Retirement--Since it had a final average plan, Tobacco's benefits were directly related to final average salary.
Protected benefits include accrued benefits, early retirement benefits, retirement-type subsidies and optional forms of benefit
However, a mechanism within all flexible benefit programs tends to dampen the effect of benefit
Corporate America may decide to fund aggressively because of financial incentives to do so, but it also needs to raise the broader issue of benefit
security before Congress.
To make certain that at least some level of benefit
security is maintained, excess assets are defined as assets in excess of 125 percent of the pension plan's current liability.
A plan amendment that has the effect of eliminating or reducing an early retirement benefit or a retirement-type subsidy, or eliminating an optional form of benefit
, with respect to benefits attributable to service before the amendment, is treated as reducing accrued benefits.
Because it is not possible to predict the most efficient method of benefit
delivery years in advance, the plan needs the freedom to change cost-sharing methods.