440
Opinion of the Court
ring); 2 J. Mamorsky, Employee Benefits Law § 8.04 (1998). Conversely, if the defined benefit plan is overfunded, the employer may reduce or suspend his contributions. See Nachman, supra, at 363-364, n. 5 (quoting Alabama Power Co., supra, at 593, n. 18) (noting that " 'the employer's contribution is adjusted to whatever level is necessary' " to provide the defined benefits).
The structure of a defined benefit plan reflects the risk borne by the employer. Given the employer's obligation to make up any shortfall, no plan member has a claim to any particular asset that composes a part of the plan's general asset pool. Instead, members have a right to a certain defined level of benefits, known as "accrued benefits." That term, for purposes of a defined benefit plan, is defined as "the individual's accrued benefit determined under the plan [and ordinarily is] expressed in the form of an annual benefit commencing at normal retirement age." ERISA § 3(23)(A), 29 U. S. C. § 1002(23)(A).3 In order to prevent a subsequent downward adjustment in benefits below a member's contribution amount, a defined benefit plan participant has a nonforfeitable right to the greater of (1) the benefits provided under the plan or (2) an amount derived from the employee's accumulated contributions, determined using an interest rate fixed by statute. See § 204(c)(2)(B), 29 U. S. C. § 1054(c)(2)(B); see also § 3(23)(A), 29 U. S. C. § 1002(23)(A); § 204(c)(2)(C), 29 U. S. C. § 1054(c)(2)(C). Given this accumulated contribution floor, plan members generally have a nonforfeitable right only to their "accrued benefit," so that a plan's actual investment experience does not affect their statutory entitlement. Since a decline in the value of a plan's assets does not alter accrued benefits, members similarly have no entitlement to share in a plan's surplus—even
3 By contrast, an "accrued benefit" for purposes of defined contribution plans means "the balance of the individual's account." ERISA § 3(23)(B), 29 U. S. C. § 1002(23)(B).
Page: Index Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 NextLast modified: October 4, 2007