News Notes: Court OKs Trading Pension Benefits For Signed Releases

It’s common to ask employees who accept early retirement to agree to waive future legal claims against you in exchange for higher pension payouts. But is it legal? Two years ago, the Ninth Circuit Court of Appeal ruled that Lockheed Corporation violated the Employee Retirement Income Security Act (ERISA) when it did just that. The court agreed with a Lockheed employee who argued that the program was illegal because an employer can’t use money in an employee pension plan for its own benefit-such as obtaining a release of claims against it. But now, following instructions from the U.S. Supreme Court, the Ninth Circuit has issued a new decision approving what Lockheed did. The court ruled that using plan assets to obtain signed releases is acceptable because it provides only an “incidental” benefit to the employe.