How Employment Agreements and Settlements of Employment Disputes May Affect Pension Benefits
NYSBA Labor & Employment Newsletter, Vol. 31, No. 2, p. 26, Fall 2006
6 Pages Posted: 4 Jan 2007
Abstract
The Federal Circuits have generally held that ERISA prohibits waivers of claims to vested pension benefits. The D.C. Circuit prohibits waivers of vesting rights. The Seventh Circuit prohibits waivers of vested pension benefits, but allows individuals to settle non-pension disputes by choosing settlement payments which may not have the most favorable associated pension plan benefits. The Second Circuit also prohibits the waiver of vested benefits but has found that waivers of the right to participate in pension plans may be effective. Nevertheless, a number of Second Circuit district courts have permitted the waiver of vested pension benefits. The Fifth Circuit upheld a waiver of vested pension benefits in an employment termination agreement when the agreement addressed a bona fide pension dispute but not one which was part of a general release in a severance agreement. Each Circuit looks beyond the face of the waiver of pension benefits for those limited waivers that each permits to verify that those waivers were knowing and voluntary.
Keywords: pensions, releases, settlements, employment, agreements
JEL Classification: H21, J32, K31, K32, M52
Suggested Citation: Suggested Citation