The Labor Department's friend-of-the-court brief filed in an upcoming Supreme Court case doesn't really take any side: it says the whole issue should go back to the appeals court.
Next week, the Supreme Court is expected to hear Lockheed Corp. vs. Paul Spink; at issue is whether it is a violation of the 1974 Employee Retirement Income Security Act to increase pension benefits for early retirees who waive all future employment claims against a company.
In its amicus brief filed with the high court, the Labor Department says the 9th U.S. Circuit Court of Appeals decision should be reversed and sent back for another review. In September 1995, the appeals court said Lockheed violated pension law by offering this deal to early retirees. While amending a plan does not violate ERISA, implementing this type of amendment might, the Labor Department said in its brief.
"A plan sponsor does not act as a fiduciary when it creates, amends or terminates a pension plan," the brief said, arguing further that the appeals court never considered whether administering the amendment violates pension law.
But to confuse things even more, the Labor Department also says in its brief that employers can give out "increased pension benefits as an incentive for early retirement, because such an arrangement merely modifies the composition of the overall compensation package."
Whether its legal to allow an employee to sign a claim releasing the company before getting the enhanced early retirement package will be up to the high court to decide.