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Suspending vested pensions for competitive activity
Summary A pension plan permitted suspension of retiree benefits for activity deemed competitive or prejudicial to the employer. DOL said ERISA’s then vesting standards did not allow that reason for suspension after the plan’s 1976 compliance date. It distinguished permitted suspension during reemployment by the same employer and tied its answer to the described existing plan.
Document
Federal opinion letter
Agency
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
Document number
P/OPINION 75-61
Date issued
February 18, 1975
Status
Unknown
EBSA's index does not mark withdrawn or superseded opinions; still posted on dol.gov as of 2026-10-26.
Status last verified October 26, 2026
Topics
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About this page: The full text below is the official document from U.S. Department of Labor, Employee Benefits Security Administration (EBSA). Ezel adds the plain-English summary and tracks the document's status. The official source linked on this page is authoritative for any reliance.
P/OPINION 75-61
203
February 18, 1975
Dear :
This is in response to your letter concerning the rights
of under the Employee Retirement Income Security
Act of 1974 (ERISA). The specific problem relates to Article
5.7 of the Inc., pension plan, forwarded by your
office, which states that a retired participant who engages
in employment or business activity considered competitive
with or "otherwise prejudicial" to the [Company] may suffer
suspension of retirement income payments.
One of the protections afforded by the ERISA is the prescription
of minimum standards for determining the nonforfeitability
of an employee's accrued pension benefits (vesting) by
employee pension benefit plans. Once an employee has achieved
a nonforfeitable right to accrued pension benefits, payment
of these benefits may be forfeited or suspended in only a
few enumerated circumstances. Payment of pension benefits
may be suspended during the time that the retired participant
is employed by the same employer for whom the participant
worked before retirement. No provision is made for suspension
of vested benefits because of employment or business activity
considered competitive or prejudicial to the employer.
The Inc., plan apparently is a single employer
employee pension benefit plan that was in existence on January 1,
1974. The plan will have to be amended in conformity with
the vesting standards just discussed by the first day of the plan
year beginning in 1976 to comply with the Act. After such
time, suspension of payment of a retired participant's benefits
for engaging in employment or business activity considered
competitive with or "otherwise prejudicial" to [Company] will
be illegal. However, the plan will be permitted to suspend
payment of a retired participant's pension benefits during
the time that he or she is re-employed by Inc.
If you have further questions, please do not hestitate to write.
Sincerely,
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