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ERISA sponsor wins fiduciary argument
June 11, 2007 by Ross Runkel at LawMemo
What are the fiduciary duties when an ERISA plan sponsor terminates the plan?
If a company's union proposes merging the to-be-terminated plan into a pre-existing multi-employer plan, does the sponsor have a fiduciary duty to give this fair consideration? No, according to Beck v. PACE International Union, decided by a unanimous Court on June 11, 2007.
The reason is simple: Merger is not a permissible method of terminating a plan. The ERISA statute, as interpreted by the Pension Benefit Guaranty Corporation, does not permit merger as a method of termination because merger is an alternative to (rather than an example of) plan termination.
My view: I thought it would come out this way, but was not expecting such reliance on the Pension Benefit Guaranty Corporation's interpretation. Just another example of the Court granting strong deference to the interpretation of a federal administrative agency.
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