Retirement Plans: Supreme Court Says SPD Terms Not Enforceable As Plan Terms- Court's holding leaves opening for showing actual harm


On May 16, 2011, the U.S. Supreme Court in CIGNA Corp. v. Amara concluded that summary plan descriptions (SPDs) are neither part of a retirement plan nor an amendment modifying the plan so as to entitle a participant to “benefits” under the plan in accordance with Section 502(a)(1)(B) of the Employee Retirement Income Security Act (ERISA).

Despite this narrow holding, the Supreme Court, in dicta, expanded the scope of equitable relief available under ERISA 502(a)(3), suggesting that the traditional equitable remedies of reformation, equitable estoppel or surcharge are available to provide relief, and that a showing of detrimental reliance is not required for all equitable remedies, but plaintiffs must show “actual harm.”

The Supreme Court’s decision, however, essentially negates lower court decisions that held where there is a discrepancy between the plan document and the summary plan description, the participant may enforce the terms of the summary plan description, if better, as the terms of the plan. Now, plaintiffs will have to prove damages in accordance with the equitable remedy sought. Where the discrepancy between the plan and the SPD is inadvertent and the plaintiffs are relying on equitable estoppel, detrimental reliance will be required. Material intentional discrepancies will likely only require a showing of actual harm.


In 1998, CIGNA converted its traditional defined benefit plan (providing 60 percent of final average pay) to a cash balance plan. The retirement benefits that an employee earned under the traditional defined benefit plan were to be converted to an initial account balance in the cash balance plan that would equal the value of the employee’s benefits already earned. CIGNA sent a newsletter to employees stating that the new plan would “significantly enhance” their retirement benefits, that it would provide “the same benefit security” with “steadier benefit growth,” and that the company would not gain cost savings as a result of the change.

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