## Facts

- Retired employees participated in employer-sponsored, ERISA-governed pension plans containing provisions that reduced pension benefits by the amount of workers’ compensation benefits for which a retiree was eligible.
- The retirees sued in New Jersey state court, arguing a New Jersey workers’ compensation statute prohibited these pension offsets.
- Employers removed the cases to federal district court.
- The district courts held the offsets invalid under the New Jersey statute, not preempted by ERISA, barred by ERISA’s nonforfeiture provision (29 U.S.C. § 1053(a)), and inconsistent with a Treasury regulation permitting such offsets.
- The Third Circuit consolidated the appeals and reversed, upholding the offset provisions.
- The Supreme Court affirmed the Third Circuit’s judgment by an 8–0 vote.

## Issues

1. Whether pension plan provisions offsetting benefits by workers’ compensation awards violate ERISA’s nonforfeiture rule, 29 U.S.C. § 1053(a).
2. Whether ERISA preempts a state workers’ compensation law that forbids pension offsets tied to workers’ compensation awards.
3. Whether a Treasury regulation authorizing pension offsets based on workers’ compensation awards is invalid as inconsistent with ERISA.

## Decision

- The Court held that workers’ compensation offset provisions do not violate ERISA’s nonforfeiture requirements.
- The Court held that ERISA preempts the New Jersey law to the extent it prohibits such offsets in ERISA-covered plans.
- The Court upheld the Treasury regulation allowing pension plans to take workers’ compensation awards into account when calculating benefits.
- The Court affirmed the judgment of the Court of Appeals.

## Legal Principles

- ERISA “nonforfeiture” protects the legal enforceability of the vested benefit defined by the plan; it does not guarantee a specific benefit level or prohibit particular benefit-calculation formulas.
- Plan terms that integrate or offset pension benefits with other income streams, including workers’ compensation, are generally permissible as part of defining the benefit itself rather than imposing a prohibited forfeiture.
- ERISA’s preemption clause broadly supersedes state laws that “relate to” employee benefit plans by dictating or prohibiting benefit formulas that ERISA permits.
- Agency regulations permitting integration with workers’ compensation awards are valid where consistent with ERISA’s text, structure, and acceptance of integration practices.

## Conclusion

The Court upheld ERISA plan provisions reducing pension benefits by workers’ compensation amounts, ruled that ERISA preempts a state prohibition on such offsets, and sustained a Treasury regulation authorizing this form of benefit integration.


Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504 (1981)