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E M P L O Y E E B E N E F I T S , C O M P E N S A T I O N
& P E N S I O N L A W
Vol. 7, No. 1: January 19, 2006
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Publisher: Employment, Labor, Compensation & Pension Law Journals
a division of
Social Science Electronic Publishing, Inc. (SSEP)
and Social Science Research Network (SSRN)
Editor: PAMELA J. PERUN
Urban Institute
Copyright: SSEP, Inc. 2006. All rights reserved.
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Topic of This Issue:
Pension Issues
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T A B L E of C O N T E N T S
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NEW and FORTHCOMING ARTICLES
"When are Releases of Claims for Erisa Plan Benefits Effective?"
John Marshall Law Review, Vol. 38, p. 773, Spring 2005
ALBERT FEUER
Law Offices of Albert Feuer
"Inherent Attorney Conflicts of Interest under ERISA: Using the
Model Rules of Professional Conduct to Discourage Joint
Representation of Dual Role ERISA Fiduciaries"
John Marshall Law Review, Vol. 39, No. 3, 2006
PAUL M. SECUNDA
University of Mississippi School of Law
WORKING PAPERS
"Changing Risks Confronting Pension Participants"
PHYLLIS BORZI
George Washington University
Department of Health Policy
"Regulating Single Employer Defined Benefit Pension Plans: A
Modern Approach"
MARK J. WARSHAWSKY
Government of the United States of America
Office of Economic Policy
"Assessing the Maintenance of Savings Sufficiency Over the First
Decade of Retirement"
ROBERT H. HAVEMAN
University of Wisconsin - Madison
Department of Economics
National Bureau of Economic Research (NBER)
Institute for the Study of Labor (IZA)
CESifo (Center for Economic Studies and Ifo
Institute for Economic Research)
KAREN ANDERSON HOLDEN
University of Wisconsin - Madison
School of Human Ecology
BARBARA L. WOLFE
University of Wisconsin - Madison
College of Letters and Science
National Bureau of Economic Research (NBER)
Institute for the Study of Labor (IZA)
CESifo (Center for Economic Studies and Ifo
Institute for Economic Research)
ANDREI ROMANOV
University of Wisconsin - Madison
S S R N I N F O R M A T I O N
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Benefits, Compensation & Pension Law we do not referee working
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Benefits, Compensation & Pension Law whose topics suit the
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scholarly discourse.
N E W and F O R T H C O M I N G Articles
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"When are Releases of Claims for Erisa Plan Benefits Effective?"
John Marshall Law Review, Vol. 38, p. 773, Spring 2005
BY: ALBERT FEUER
Law Offices of Albert Feuer
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=827885
Contact: ALBERT FEUER
Email: Mailto:afeuer@aya.yale.edu
Postal: Law Offices of Albert Feuer
Suite 7M
110-45 71st Road
Forest Hills, NY 11375 UNITED STATES
Phone: 718-263-9874
Fax: 718-575-0006
ABSTRACT:
This Article proposes the following principles to determine if a
release may deprive an individual of the right to a court review
of the denial of a claim to an ERISA plan benefit entitlement:
1) The ERISA spendthrift prohibition on the assignment or
alienation of pension benefits voids any release of such a plan
or its fiduciaries from a claim that an individual is entitled
to accrued benefits under such plan. This does not preclude
settlements of pension benefit claims disputes. However, only
judicially approved settlements are binding.
2) The ERISA fiduciary-duty provisions void any release of a
welfare plan or its respective fiduciaries from claims that an
individual is entitled to benefits under such plans unless, when
the individual executed the purported release:
(a) he or she voluntarily agreed to release the plan and
fiduciaries from the claim at issue;
(b) he or she fully understood what a prudent fiduciary would
have known about the released rights; and
(c) he or she received fair and reasonable consideration for
such release.
Thus, a court reviewing the effectiveness of a release must
generally review the individual's underlying benefit claim.
Therefore, fair settlements of bona fide ERISA claims disputes
will be approved. However, releases which do not specify the
benefits claim at issue, such as general releases in employee
termination agreements do not generally affect such ERISA
claims.
3) The fiduciary-duty provisions void any release of a pension
plan or its fiduciaries, from a claim that an individual is
entitled to benefits that accrued under such plan on or after
the execution of the release, unless each of the three
conditions set forth in the second principle is satisfied. Two
such major releases are often at issue. First, the release of a
right to participate in an ERISA plan, such as a 401(k) plan,
and second, the release of a right to have payments that are
part of a settlement of a non-ERISA dispute, such as one
pertaining to a purported wrongful layoff, treated for pension
benefit purposes in the same manner as similar compensation.
These three principles, which rest upon ERISA's fundamental
purpose and basic provisions, have not been consistently
considered or applied by the courts. The courts have also rarely
considered whether ERISA's prohibition of any agreement
purporting to relieve fiduciaries of their duties voids any
attempt to release claims to any ERISA benefit entitlements.
Many courts have applied contract principles, supplemented at
times by special scrutiny. Fiduciary principles, however, also
place the burden of showing that the individual received fair
consideration and fully understood the release on the party
wishing to rely on an ERISA release that is not void ab initio.
Thus, individuals have been wrongfully deprived of pension and
welfare benefits to which they are entitled.
JEL Classification: H21, J32, K31, K34, M52
______________________________
"Inherent Attorney Conflicts of Interest under ERISA: Using the
Model Rules of Professional Conduct to Discourage Joint
Representation of Dual Role ERISA Fiduciaries"
John Marshall Law Review, Vol. 39, No. 3, 2006
BY: PAUL M. SECUNDA
University of Mississippi School of Law
Contact: PAUL M. SECUNDA
Email: Mailto:psecunda@olemiss.edu
Postal: University of Mississippi School of Law
Lamar Law Center
P.O. Box 1848
University, MS 38677 UNITED STATES
Phone: 662-915-6858
Fax: 662-915-6842
ABSTRACT:
Although ERISA permits employers to be both the settlor and
fiduciary of a plan, the statute does not talk about the
appropriate role of corporate counsel in advising its client in
potentially both of these capacities. To determine the ethical
course for attorneys to take when determining whether to jointly
represent these dual role ERISA fiduciaries, it is necessary to
consult the relevant provisions of the Model Rules of
Professional Conduct. Although the Model Rules speak generically
of identifying the client in corporate situations, and also with
regard to how to resolve concurrent conflicts of interests
between two clients, the Model Rules do not address themselves,
or in any of the commentary, the common ERISA circumstance in
which corporate counsel, whether in-house or outside counsel,
represents the employer qua employer, as well as the employer as
the fiduciary/plan administrator of an ERISA plan. Indeed, as a
general matter, counsel to a plan is not considered an ERISA
fiduciary, so the fiduciary rules of Part 4 of Title I of ERISA
do not even apply.
This article for the first time therefore proposes a
modification to the current Model Rules to address these
recurring and inherent attorney conflict of interest situations
under ERISA. Although the new provision, denominated Rule
1.13(h), would not ban outright joint representation of dual
role fiduciaries under ERISA, it would establish a strong
presumption against such joint representations because of the
inevitable conflicts of interest that develop between the
non-fiduciary interests of the employer and the fiduciary
interests of the employer as plan administrator. Only if counsel
can assure herself under the conflict of interest principles for
current and former clients under Model Rules 1.7 and 1.9 that
such recurring conflicts will not jeopardize the effectiveness
of the legal representation of either the company or the plan,
can counsel ethically carry on a joint representation under
these circumstances.
JEL Classification: J26
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W O R K I N G P A P E R Abstracts
_________________________________________________________________
"Changing Risks Confronting Pension Participants"
BY: PHYLLIS BORZI
George Washington University
Department of Health Policy
Paper ID: PRC Working Paper Series
Date: 2005
Contact: PHYLLIS BORZI
Email: Mailto:borziph@gwu.edu
Postal: George Washington University
Department of Health Policy
2021 K Street, NW, Suite 800
Washington, DC 20006 UNITED STATES
ABSTRACT:
The past decade has seen a shift from traditional
employer-sponsored defined benefit pensions toward individual
account defined contribution plans. This has profound
implications for participants' retirement security, as it
involves a reallocation of risks and rewards from the plan
sponsor to the employee. While much has been written about the
transfer of investment risk and the potential consequences of
bad investment choices, less attention has been focused on other
potential hazards to retirement security. These include the
effect of job changes and other employment factors on
contribution patterns, the chance of outliving one's accumulated
assets, and the tension between encouraging participants to save
for retirement while allowing access to those assets for a
variety of other pressing financial needs. This chapter examines
these challenges to participant retirement income security and
identifies several legal and policy changes that might enable
participants to cope better with such changes.
______________________________
"Regulating Single Employer Defined Benefit Pension Plans: A
Modern Approach"
BY: MARK J. WARSHAWSKY
Government of the United States of America
Office of Economic Policy
Paper ID: PRC Working Paper Series
Date: 2005
Contact: MARK J. WARSHAWSKY
Email: Mailto:MARK.WARSHAWSKY@DO.TREAS.GOV
Postal: Government of the United States of America
Office of Economic Policy
1500 Pennsylvania Avenue, N.W.
Washington, DC 20220 UNITED STATES
Phone: 202-622-0563
ABSTRACT:
Recent financial market and plan termination experiences have
exposed the shortcomings of existing funding, disclosure, and
premium rules governing private single-employer defined benefit
pension plans in the United States. These rules were designed to
provide predictability for plan sponsors and administrators, by
insulating pension plans from the realities of economic and
financial market fluctuations. Unfortunately current practice
often overlooks key financial principles that arguably should
inform a responsible set of pension rules and the insurance
system backing the plans. We outline the key characteristics of
pension plans needed to beneficially guide rule-making and offer
examples drawn from proposed funding and premium rules.
______________________________
"Assessing the Maintenance of Savings Sufficiency Over the First
Decade of Retirement"
BY: ROBERT H. HAVEMAN
University of Wisconsin - Madison
Department of Economics
National Bureau of Economic Research (NBER)
Institute for the Study of Labor (IZA)
CESifo (Center for Economic Studies and Ifo
Institute for Economic Research)
KAREN ANDERSON HOLDEN
University of Wisconsin - Madison
School of Human Ecology
BARBARA L. WOLFE
University of Wisconsin - Madison
College of Letters and Science
National Bureau of Economic Research (NBER)
Institute for the Study of Labor (IZA)
CESifo (Center for Economic Studies and Ifo
Institute for Economic Research)
ANDREI ROMANOV
University of Wisconsin - Madison
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=844666
Paper ID: CESifo Working Paper Series No. 1567
Date: October 2005
Contact: ROBERT H. HAVEMAN
Email: Mailto:HAVEMAN@LAFOLLETTE.WISC.EDU
Postal: University of Wisconsin - Madison
Department of Economics
1180 Observatory Drive
Madison, WI 53706 UNITED STATES
Phone: 608-263-7398
Co-Auth: KAREN ANDERSON HOLDEN
Email: Mailto:HOLDEN@LAFOLLETTE.WISC.EDU
Postal: University of Wisconsin - Madison
School of Human Ecology
1225 Observatory Drive
Madison, WI 53706 UNITED STATES
Co-Auth: BARBARA L. WOLFE
Email: Mailto:wolfe@lafollette.wisc.edu
Postal: University of Wisconsin - Madison
College of Letters and Science
Madison, WI 53706 UNITED STATES
Co-Auth: ANDREI ROMANOV
Email: Mailto:romanov@lafollette.wisc.edu
Postal: University of Wisconsin - Madison
Madison, WI 53706 UNITED STATES
ABSTRACT:
The adequacy of retirement savings is central to the U.S. debate
over the effects of Social Security reform and pension changes
that would place greater responsibility on individuals for
accumulation of retirement resources. We contribute to this
discussion by examining the extent to which individuals maintain
initial levels of resources over the first decade of retirement.
We compare annuitized wealth, including Social Security and
pension wealth, to two consumption standards - a household's
preretirement earnings and the poverty threshold. We analyze the
relationship of individual characteristics to changes in this
ratio over time, including the effects of widowhood and
post-retirement work.