THE IMPACT OF LOCKHEED - MORE FLEXIBILITY FOR EMPLOYERS IN PENSION BENEFIT PLANS

In Lockheed Corporation v. Spink, the United States Supreme Court held that ERISA's prohibited transaction provision does not prevent an emp loyer from amending a pension benefit plan to require participants to sign a waiver of employment-related claims as a condition of receipt o f enhanced early retirement benefits. In so doing, the Court extended to pension benefit plans the principle established in relation to welf are benefit plans in its 1995 decision in Curtiss-Wright Corporation v . Schoonejongen: that employers and other plan sponsors do not act as fiduciaries when they adopt modify, or terminate the terms of ERISA-co vered plans. Accordingly, such actions are not subject to review under the statutory provisions regulating the conduct of fiduciaries. In Lo ckheed, the Court also held that paying out benefits pursuant to the o therwise lawful terms of a pension plan does not violate ERISA's prohi bited transaction provision, regardless of what the plan requires of t he employee in return for those benefits. Finally, Lockheed held that the 1986 amendments to OBRA, which eliminated ERISA's age-based exclus ionary provision and prohibited age-based benefit accruals, apply pros pectively and not retroactively to defined benefit plans. The full sco pe of the Court's decision and reasoning is the focus of this article.