The Employment Retirement Income Security Act of 1974, more popularly known as ERISA, protects the retirement incomes of individuals in New Jersey and throughout the country. When disputes arise over ERISA benefits, an “actuarial equivalence” challenge might arise. This can help to ensure that proper benefits are paid and received.
Ambiguity impacts ERISA benefits
A recent U.S. District Court ruling in Massachusetts says that legal challenges can contest the actuarial equivalence of ERISA benefits. The actual equivalence applies to benefits options, such as a joint or survivor annuity versus a single life annuity, and their current value. The idea is that they must be equal to provide equal benefits over the long run. But some policyholders question whether that actually is the case.
Federal court legitimizes ERISA actuarial challenges
Federal law requires various types of retirement benefits offered in ERISA plans to be equal in value. Specifically, they must be “actuarially equivalent” to abide federal law. That is not always the case, but federal law does not clearly define the term. That raises legal challenges when a policyholder suspects that the benefits are not equal in value or stand a good chance of being unequal. Instead of basing the understood actuarial equivalence on reasonable assumptions, the federal ruling says a financial accounting or legal challenge might be in order.
Words must contain meaning
“The term must mean something,” the ruling says, adding that federal law currently does not define “actuarially equivalent,” which creates legal problems. The recent federal court ruling affirms that employees can file legal challenges based on the actuarial equivalence of the various retirement benefits offered. If plans are not equal in value at least at the time they are offered, then ERISA violations might have occurred.
Local ERISA challenges can be complicated
The federal government has left a big hole in the ERISA law that leads to court battles over the actuarial value of retirement benefits offered. That means potentially thousands of local workers, managers and others might receive less than they should from their retirement benefits over the long run. An experienced ERISA attorney in New Jersey may help file challenges to ensure fully funded retirement plans.