Job Responsibilities Matter, Not Job Titles

By Bolton June 10th, 2022

The Sixth Circuit U.S. Court of Appeals in Ohio recently ruled in favor of a pension fund that suspended a working retiree’s monthly benefit where the retiree worked in a similar job in the same industry. The retiree argued that his work performed did not violate the plan’s suspension of benefits provisions, but the Court found that any differences in job titles were immaterial. The case, Helgemo v. Operating Engineers Local 324 Pension Fund, highlights important considerations for pension funds when they decide to suspend benefits for retirees engaging in Prohibited Employment.

Under Section 203(a)(3)(B)(ii) of ERISA, a multiemployer defined benefit pension plan may suspend a retiree’s monthly benefit if the retiree returns to work in Prohibited Employment. Prohibited Employment is commonly defined as employment in:

  1. the same industry in which other employees are covered by the Plan;
  2. the same trade or craft in which the retiree worked under the Plan prior to retirement; and
  3. the same geographic area covered by the Plan.

After he began receiving benefits from the fund, the retiree began working for a company that also worked on marine construction projects in the Great Lakes region, where he operated heavy machinery as part of his work.

The retiree argued that his post retirement work was not performed in the “same industry,” nor the same “trade or craft.” However, the court upheld both rulings as the retiree was (1) performing work for an employer who was required to make contributions to the fund on behalf of its employees, and (2) operating under a similar job classification as he was prior to retirement. Ultimately, a job’s responsibilities determine whether the job is Prohibited Employment – not simply the job title.

It is important for both participants and plan sponsors to fully understand the nuances of returning to work after retirement and how their suspension of benefits provisions are applied. For instance, some plan sponsors will declare a “critical shortage” during a period of high work demand so that retirees may return to work without having their benefits suspended.

Please contact your Bolton Consultant with any questions that you may have regarding suspension of benefits under ERISA Section 203(a)(3)(B)(ii).