Can An Employer Unilaterally Change Its Pension Plan From A Defined Benefit Plan To A Defined Contribution Plan In The Unionized Context?

In recent years, most employers who have Defined Benefit pension plans ("DB" plans) are looking for ways to contain rising costs associated with the DB plan and to maintain a level of predictability with respect to contributions made to the plan.  In order to achieve this, employers are increasingly switching to Defined Contribution pension plans ("DC" plan) in an effort to achieve more predictable funding costs.  However, a unilateral change from a DB plan to a DC plan made by an employer is not without risk in the unionized setting.

In virtually all pension plan documents, a clause exists which gives the employer the unilateral right to amend, modify or make changes to the pension plan, provided that the change does not result in a reduction of accrued benefits to plan members.  Often times, employers in a unionized setting mistakenly believe that this gives them the "green light" to go ahead and make revisions to the plan, without union involvement, negotiation or