<TITLE>High Court Defeats Pension Lawsuit</title> <body bgcolor="#ffffff"> <a name="top"></a> <a href="../homepage.htm"><img src="../image/newcomhb.gif" border=0 alt="home page"></a> <IMG SRC="../image/topbar.gif"> <TABLE Border=0 Width="100%" Cellpadding=10> <TR ALIGN="LEFT" VALIGN="TOP"><TD COLSTART="1" VALIGN="TOP" WIDTH="175">  <a href="topnewsx.htm">Top News</A> <a href="sportsne.htm">Sports</A> <a href="lotteryx.htm">Lotteries</A> <a href="internat.htm">International</A> <a href="national.htm">National</A> <a href="washingt.htm">Washington</A> <a href="financex.htm">Business</A> <a href="wallstre.htm">Wall Street</A> <a href="entertai.htm">Entertainment</A> <a href="healthsc.htm">Health/Science</A> <a href="metrodex.htm">Regional</a> </TD> <TD COLSTART="2"> <H3>High Court Defeats Pension Lawsuit</H3> By RICHARD CARELLI Associated Press Writer WASHINGTON (AP) -- The Supreme Court, in a ruling that could affect the 33 million American workers and retirees who participate in defined-benefit pension plans, today killed a lawsuit by five retired employees over what they say was a $1.2 billion surplus in their employer's contributory pension plan. The court ruled unanimously that Hughes Aircraft Co. did not violate a federal pension-protecting law when it chose to stop contributing to the pension fund because of the large surplus already built up. The key issue underlying the case was whether pension plan participants -- and not the employers who operate and partially fund them -- are entitled to control such surpluses. The federal Employee Retirement Income Security Act of 1974 (ERISA) requires that some surpluses be distributed to covered employees when a pension plan is terminated. The five Hughes retirees had argued that by stopping its contributions in 1991, Hughes had effectively terminated one plan and begun another. A federal judge in Arizona rejected that argument but the 9th U.S. Circuit Court of Appeals reinstated the retirees' 1992 lawsuit and ruled that a trial should be held to determine whether the company, now part of General Motors Corp., violated ERISA. Writing for the nation's highest court today, Justice Clarence Thomas said the 9th Circuit court was wrong. He said the retirees' claims ``proceed on the erroneous assumption that they had an interest in the plan's surplus.'' Thomas noted that the 1991 amendment Hughes made to the pension plan ``did not affect the rights of pre-existing plan participants and Hughes did not use the surplus for its own benefits.'' Like tens of thousands of employers, Hughes sponsored a pension plan that guaranteed its participants of a fixed level of benefits at retirement regardless of the plan's investment successes or failures. In 1991, Hughes switched to a two-tier pension system. New participants no longer make contributions and are entitled to lesser benefits on retirement. Hughes employees who retired before 1991 continue to receive the higher level of benefits, and employees who were with the company before 1991 and still have not retired could choose between the contributory and noncontributory options. The 1992 lawsuit had accused the company of shortchanging retirees who had contributed to their pensions by using the pension surplus for the benefit of new employees. The case is Hughes Aircraft Co. vs. Jacobson, 97-1287. (PROFILE (CO:General Motors Corp; TS:GM; IG:AUT;) ) AP-NY-01-25-99 1233EST Copyright &#169 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. <center><A HREF="../homepage.htm">Home</a> | <A HREF="#top">Top of Page</a></center></TD></TR> </TABLE> <H6>01/25</H6></body></html>