That is, under the terms of the plan, the amount of pension to which plaintiffs are entitled is not fixed until the setoff is made.
This case appears to fall within the scope of actions that an employer would take in defining the contents of a benefit plan, on which ERISA has little bearing. Plaintiffs argue that their severance benefits have nothing to do with their pension; the severance payments actually were compensation for the hardships of working in Venezuela. We do not question the difficulties of working in foreign countries. This argument is contradicted, however, by plaintiffs' stipulation that they knew their severance benefits would be deducted from their pension payments. Stipulation at 4. The setoff was not capricious. It is easily seen as part of the internal design of the plan itself. Ultimately, we find it persuasive that the employer made all the contributions to both the pension trust and the trust for severance benefits. We consider this adjustment between strictly employer-funded benefits less infringing than that of a pension fund setting off unrelated outside income such as social security benefits or worker's compensation.
Having decided that defendant's actions are not outside the law, we are also satisfied that the setoff formula is intended to protect legitimate interests. In this case of a multinational corporation, integration is necessary to insure fairness to all employees in the administration of pension funds, few of whom receive such generous protection from foreign labor laws. Integration also helps control the cost of pension plans. We recognize that its application has limits. Nevertheless, it is a useful tool for encouraging private plans, making them more widely available, and for stabilizing or improving present plans.
We have little direct guidance for determining the permissibility of setoffs under ERISA. But plaintiff's suit relies solely on § 1053, which itself is ambiguous as a basis for their cause of action. When we combine congressional and administrative understanding of setoffs with the Supreme Court's construction of section 1053 in the critical Alessi opinion, we find that ERISA does not prohibit this setoff. We will issue an order consistent with the foregoing opinion.
The parties have stipulated to the relevant facts an filed fully-briefed cross motions for summary judgment based on the stipulation. Having considered these materials, the Motion of the Plaintiffs is DENIED, and the Motion of Defendant is GRANTED, and JUDGMENT is hereby ENTERED for the Defendant in accordance with the accompanying opinion.
ORDERED filed this 18th day of April, 1985.