In September 1984, Firestone terminated its contributory defined benefit plan. These "plan-rate earnings" become part of the employees' accrued benefits, and earnings based on the plan rate are typically less than a plan's "investment earnings," which represent the actual market rate of return on a plan's assets. A contributory defined benefit plan usually specifies a rate of return on the employee contributions. In a "contributory defined benefit" plan, employees contribute to the funding of their defined benefit plans, typically by contributing a fixed percentage of their salaries. DUNKLE, GUIDE TO PENSION AND PROFIT SHARING PLANS § 1.03, at 1-3 (1989). Since the employer must contribute the actuarially determined amounts necessary to fund the benefits promised, the company's periodic contributions to the plan vary with, inter alia, the investment performance of plan assets. We therefore affirm.Īn employer sponsored "defined benefit" plan provides a fixed level of retirement benefits to employees, the plan participants. We agree with the district court that the governing statute is ambiguous and that the PBGC's interpretation of the legislation is reasonable. ("Firestone"), and the company now appeals. The district court upheld those regulations on a challenge by Bridgestone/Firestone, Inc. The Pension Benefit Guaranty Corporation ("PBGC"), a United States government corporation that administers and enforces the pension plan termination insurance program designed to guarantee the payment of nonforfeitable pension benefits, promulgated regulations mandating the distribution of such excess earnings to employees and their beneficiaries upon the termination of a contributory defined benefit plan. This appeal presents the question of whether the pension plan termination provisions of the Employee Retirement Income Security Act of 1974 ("ERISA") 1, prior to its amendment in 1987, allowed an employer to retain all residual assets of an overfunded plan when actual investment earnings on employee contributions exceeded the plan specified interest rate on those contributions. Opinion for the Court filed by Circuit Judge SILBERMAN. Furst were on the brief, for appellees.īefore MIKVA, SILBERMAN and D.H. Gould, Washington, D.C., with whom Carol Connor Flowe and Robert L. Anklam, Washington, D.C., were on the brief, for appellant. United States Court of Appeals, District of Columbia Circuit. PENSION BENEFIT GUARANTY CORPORATION, et al.