ERISA-First Circuit Rules That The Plaintiffs’ “Banked Hours” Are Benefits Which Have Accrued, And Eliminating Them Would Violate The ERISA Anti-Cutback Rule.

The case of Bonneau v. Plumbers and Pipefitters Local Union 51 Pension Trust Fund, No. 13-1515 (1st Cir. 2013), involved a dispute between a group of now-retired union employees over certain “banked hour” benefits which their union Pension Trust wants to eliminate, and the Pension Trust, which is in distress and trying to find sources of funding to meet its obligations to its larger group of plan participants.

The banked hour benefits were hours of service, in excess of those needed to earn a year of service for pension credit, recorded by the Pension Trust for crediting as needed to earn pension credit in the future. In this case, the banked hours were granted retroactively, that is, after they had been earned. The Trustees for the Pension Trust agreed to not impose this elimination of the banked hour benefits, which would be effectuated through Plan Amendment Nine, until a court had determined whether such elimination violated the ERISA anti-cutback provisions, which protects “accrued benefits” against reduction by amendment. The district court rendered summary judgment for the plaintiffs-the retired union employees-and the defendant Pension Trust appeals.

The Court said that this case raises a question of first impression in this (the first) circuit as to whether a benefit, conferred retroactively during the course of employment, constitutes a “benefit attributable to service” and thus an “accrued benefit” for purposes of ERISA’s anti-cutback rule. In analyzing this issue, the Court found that the plaintiffs’ banked hour benefits are in fact “accrued” and that Amendment Nine would violate the anti-cutback provisions. The Court therefore affirmed the district court on that basis.

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