Plan Administrator’s "Second Plan Interpretation" Violates Anti-Cutback Rule

The Third Circuit held that a plan administrator's plan interpretation requiring an actuarial reduction of certain employees' pension benefits conflicted with the plan's terms.  As such, its decision to reduce participants' benefits violated ERISA section 502(a)(1)(B), and also violated ERISA's prohibition against cutbacks of accrued benefits. 

Plaintiff John Cottillion left employment with United Refining Company prior to age 65, the plan's normal retirement age.  The plan administrator had been interpreting the plan terms to provide for an unreduced pension benefit commencing before age 65.  In connection with certain plan restatements, a provision was added to the plan to provide for actuarially reduced benefits for those who commenced benefits prior to normal retirement age.  The plan's actuaries subsequently informed the plan administrator that paying unreduced pensions jeopardized the plan's tax qualified status.  The plan administrator thus informed