Free Motion to Amend/Correct - District Court of Connecticut - Connecticut

5 Case 3:03-cv-00383-WIG ‘ Document 308-3 I n Filed O4/05/2006 Page 1 of 4 -
{FREDERICK U; CONARD_ JR. U & `I ll MARK L COHEN,
l SS2g§gsfY“.L*:.‘i»..~'§;·.;4..G - 3 _ =**=·=···£~~S¤L
CHA L. E. MILL.! _ , - ‘ _ _
zrzezm 3 3 3 af ém y . 3 ; 3 - ° °‘“·?§¤€?~ E°“‘’
FRANCIS M. DOOLEY _ .r _ I JDHN A_ cyAgCH
;$5$5€.t‘§N’$-.iP;§f..S /99 - , ` 3 3 · 3 ‘ ‘;.k$2.f;.t'E.°.$SZ’$.Z‘v
$5;‘.i.’f.'*..‘·."i"..$’..·¤»~.~». ...3.3- { Q- E. /6j 2 ;; · - {31'Jf.'f.'Z; ."·§."2$'2i°’* .
3 rz.:-.-:5-;r::.‘;;25 · ff 3 3 MARK .,_
IHA H. GQLGMAN - _ ' LEAH CCIHEN CHATINOVEZR
SCOTT L.. Mugiglé;. . _ (203) 549-4770 { _ " LhH|:|0OI<5
§§E§?é:E;§&KLi;T Tztzccpnzn NO. {20-3) 724-5933 I I 3 ` $l.IZ_ABL€THuA.-I-EQIIIHARD
PETER vv. BENNEFQ _ _ TELECOMMUNICATIONS (20.3) 727·9l.96- . _ 3 _` rl gI:c;t$‘:a¤cFr -
lzgxgg E.-_;_•¤é1;g*§:*;_r_ ll . _ - , ‘ names e. s·0Ms¤¤v_
Rcaznr |._. WYLD 50 WI-K 5'TREET THREE LANDMARK sauna; . Pcrrrzn 5·rn5g·r _ JQAN w_ pg|_¤MAN
Maar M. ACKERLY aosrou, MA canoe STANFORD. cr osso: unxsvru-s. c·r cease 3 ‘—'**'°*’• '-· *°°€F'* *
• (SI?} 542-5465 I {203) 359**544 (ana) 435`a539 - •ADI·(|Y1’l¤ IN CT G HA
CNARQ-E§';é*L2V’:*RD _ - ••a¤mw¢¤m cr •. lm
3 *-*-5* · ‘ _ - ·` 3 3 ` ’:•¤m1··r¢¤n• mr. ra. us s nc naw
WILLI-AM O. RIISKA ll ·· . ._ , I _•·
_—jb·_ggg;g§_§§§E§§¤J5R_,_ 3 . g - _ _ . ZT.'Z`ZYIL°.`§'.Z`.¥.T.°Z°i€T.T`L.mv
JAMES . · . " ‘. .
PAUL D. SANSON ' · _ -._ ` -.` · ‘ · I
. - " June 4, 1987 Y - -l ‘ 3i . I
Alan Wesley, President _ ` _ 3 A 3
_ 3wasley Products, Inc. - _ 3- .3~ r ` 3 I
_ Plainville Industrial Park ‘* ._· 3_ l - '
Plainville, CT 06062 3 "3 _ `3 p 3 p
n ` Dear Alan: 3 \. I _ . .. - .-.- .....Q. . .... -.--.-. n-....... .-, .--.-..
j . I am writing to respond to-your inquiry about methods of
_ _ benefit distribution under the retirement plan covering . -
‘ salaried employees of Wasley Products, Inc.-.P apologize for
the delay in this reply. Unfortunately, while the adoption
r agreement you provided from your files_was in order, the_basic
plan document provided by your pension COHSU1tBDt·WdS not the p
_ . correct one, and we had to obtain the proper document in order r ~
_to interpret the benefit payment provisions. - ‘ · 3 I
l ` Section 7.l3A of the plan prescribes the method of payment
of retirement benefits to an eligible individual. .It provides
-‘ that: "_ ~ 3.* · 3 .I °* ` 3)
I any such benefit shall be distributed on the 3 3‘ 3
direction of the Plan Administrator in such , `vi _
.3 manner as shall be determined to be in the 3I_ -_ I
best interest of the Participant or his I y
r Beneficiary, after consulting the same, in ‘ .
_. one or more of the following methods. 3- 3M . -
··················· · ·····=··· · Five options are listed, including a_lump sum cash payment, _ .` I
- delivery to the retiree of insurance policies (or cash value- ‘
. `a . i · ` Q3 n I - . .

P Case 3:03-cv-00383-WIG Document 308-3 Filed O4/05/2006 Page 2 of 4
I Alan Wasley, President 3 _ l " ·
June 4, 1987 _ · p ,
I . Page 2 P . _
l · . ` · `P -
} thereof) sufficient to fund his or her benefit, purchase of an
g annuity.yielding the equivalent of the retiree's monthly ·
benefit under a straight life annunity or joint and survivor
annunity, as the case may be, or “any other method selected by
the Plan Administrator" which accomplishes essentially the same
d result, subject to certain restrictions. · tai .. L -_a .
Language such as this gives the Plan Administrator,_who I
. understand is Sandi Dumas, fairly broad discretion to exercise
- her best judgment in each individual case, after discussing the
matter with the affected individual(s). I understand,-however,
that your specific question.is how the Plan Administrator _
. - should respond if during the course of that consultation the
` retiree expresses a preference for a lump sum form of benefit.
` . Our advice would be not to provide a lump sum form of .
‘ benefit in a "defined benefit" plan such as yours, except under
[ · very unusual circumstances. The primary purpose of a defined
`benefit retirement plan is to provide a pre—determined flow of
_ income for the life of the retiree and/or his or her spouse.
_Any benefit payment method which jeopardizes that goal is
presumptively undesirable. The risk of loss through a variety
of potential problems, including unexpected reverses in even l
prudent investments, makes payment of a lump sum benefit unwise
`for most retirees. The primary exceptions which come to mind
‘ are cases where (1) both retiree and spouse are independently
` - _wealthy, and the projected benefit from your plan would _
- represent an insignificant portion of their retirement income,
_ `or (2) the projected benefit is so small that the value to the
" retiree does not justify the administrative cost associated
- .with a monthly payment.
The pension experts in my office tell me that this topic P
- · has been the subject of frequent litigation, and that the *
‘ ‘courts generally uphold the right of a Plan Administrator to
“ reject a request for a lump sum benefit, especially where a
. defined benefit plan is involved. We should have little we -~
difficulty defending a decision by your Plan Administrator to
.distribute a monthly benefit despite a retiree's preference for
_ a lump sum, as long as such decision is made in good faith,
with the best interests of the retiree and/or beneficiary in ‘ y .
mind, and in accordance with principles applied on a consistent
` basis to all participants. ` ‘_ P _ ' _

\ ‘ — ~
i Case 3:03-cv-00383-WIG Document 308-3 Filed Q4/05/2006 Page_3of4 -
’ Alan Wasley, President I nl *
_ June 2, 1987 I " · i u -
Page 3
‘ In the unlikely event the decision is in favor of a lump
Â¥ sum, I understand there is also a question as to how to compute
the benefit. The general rule is that the lump sum should be
equivalent to the present value of the monthly life annunity to
y which the retiree would otherwise be entitled. Normally this
u value is based on the present market price of such an annunity.
However, in the event more than one quote is obtained and "
i the prices differ (as may happen if different companies use _
* different actuarial or interest assumptions), our advice is to
select the lowest quote,_since this is the only way the Plan
Administrator can fulfill his or her duties to both the retiree
_ and the plan. That is, he or she has a duty not to deplete the
‘ gassets of the plan any more than absolutely necessary to pay
the benefit in the method which had been decided upon._ - I
- ‘_ I also understand you are interested in clarifying your
plan so that misunderstandings about benefit payment methods do
· not arise in the future. Our pension experts tell me that new
requirements promulgated under ERISA (as amended), which will
become applicable to your plan in 1988, may well require
. elimination of the provision which allows discretion as to the
form or timing of the retirement benefit._ Ournadvice Wi1l»~¥ .» .... -~ GMU
· probably be to delete the lump sum payment as a form of
` retirement benefit, and to limit the options to a straight life
p annunity or a joint and survivor annunity. This will avoid
both_the potential damage to the fiscal integrity of the plan
h · ` which would result from a series of lump sum'elections by ·
retiring employees, and the risk of a human relations disaster y
in the event that fiscal-mismanagement or misfortune were to
. leave a retiree and/or spouse destitute, with no retirement
income from Wesley Products.- - ‘
_ If in fact no salaried retirees have yet received a lump
- sum benefit, and if starting in 1988 no such option is likely
_ to be available, its seems particularly inappropriate to—permit
this benefit payment method to apply to those who happen to
:‘ ·- retire this year. _ ` __ __ _
` ‘ One final point deserves mention. Your plan states that if
` _no other method is decided upon, pension benefits shall be paid
‘to those who are married at the time of their retirement in the
‘ . form of a joint and survivor annunity, As you may know, ‘ ·
· federal requirements now dictate that a retiree election gg; to _
take a joint and survivor annunity must include his or her p
Qspouse's approval. I assume Sandi Dumas will make sure this
. point is covered. n ` .. “ - r
. .5 ‘

i P Ciase 3:03-cvgOO383-WIG Document 308-3 F Iii|edvO4/05/2OQG-i Page 4 of4 _. .
[ _ n Alan Wesley, President · ‘ h in -_.i" i_‘ . l.
Â¥ June 4, 1987 _
I - _ Page 4 r
; I hope this addresses your immediate guestions about the
form of retirement benefit available under your pension plan
covering salaried employees. If further clarification is _.; y
needed, I assume you will let me know. _ I ..- ·- __
4 ·_ ‘ y .i ,Very`tru1y yours,f p? _‘_... . I
. Brian Clemow . `
Bcxiu 3 r v l _ I _·.i I . ~
Enclosure ` n in- n n ` ‘. `· — Q ~~
` P.S. I have copied and retained the portions of your ‘
pension file which we needed in order to address the _ "
· questions you raised, and I am returning to you- _ _
_. . herewith your entire file, plus the basic plan_
‘ document we finally obtained from your consultant.