Delaware residents with retirement plans may want to keep a close eye on a complex ERISA case. The case is being heard in the District Court of Massachusetts, Belknap v. Partners Healthcare System.
What is ERISA?
ERISA stands for the Employee Retirement Income Security Act. The purpose of this law is to ensure that employees receive the retirement and pension benefits that were promised to them by their employers.
What is this case about?
The court is delving into the meaning of “actuarially equivalent” and has ruled that the case may proceed after additional supplemental briefings in the case. ERISA itself does not give a definition of “actuarially equivalent,” and the federal courts that could set legal precedents have been unable to come up with a standard definition. This has led the District Court to rule that the case cannot be dismissed at this time because the plaintiff may have grounds to bring suit depending on the legal definition yet to be applied to the term.
What does ERISA require?
Federal statues and ERISA require that different qualified benefit plans, or pension plans, offered to a single group of employees must be “actuarially equivalent.” This means that if multiple types of annuities are offered under the plan, say, a joint and survivor annuity or a single life annuity, then the theoretical value of each annuity choice must be equal. The defendant’s original motion to dismiss the case was not convincing enough for the court to stop the proceedings, and additional security and evidence are required before a ruling will be handed down in this case.
ERISA is a complex statute. If an employer administers a retirement plan for employees, it is important for them to be compliant with its guidelines. Failure to comply might bring forth a lawsuit from employees.