## Facts

- Paul L. Spink worked for Lockheed from 1939–1950 and returned in 1979 at age 61.
- At the time of his return, Lockheed’s defined-benefit retirement plan excluded employees over 60 from participation, as then permitted by ERISA.
- After OBRA repealed ERISA’s age-based participation exclusion and restricted age-based accrual changes, Lockheed ended the exclusion effective December 25, 1988, but denied newly included employees service credit for pre-inclusion years.
- Lockheed later amended the plan to create two early-retirement incentive programs funded from plan surplus assets.
- The incentives offered increased pension benefits conditioned on employees releasing employment-related claims against Lockheed.
- Spink declined the enhanced benefits because he did not want to waive potential ADEA and ERISA claims, retired without the incentives, and sued.
- Spink alleged (1) a prohibited transaction under ERISA § 406(a)(1)(D) based on using plan assets to obtain releases, (2) fiduciary breach by the retirement committee for implementing the amendment, and (3) that OBRA required crediting his pre-1988 service.

## Issues

1. Whether ERISA § 406(a)(1), including § 406(a)(1)(D), prohibits an employer from conditioning early-retirement benefits on a participant’s release of employment-related claims, and whether a § 406(a) claim requires that a fiduciary caused the challenged transaction.
2. Whether OBRA’s ERISA/ADEA amendments required retroactive crediting of benefit accrual/service for years worked before the date previously excluded older employees became eligible to participate.

## Decision

- The Supreme Court reversed the Ninth Circuit and remanded.
- ERISA § 406(a) was not violated because § 406(a)(1) requires a transaction caused by a fiduciary, and Lockheed was not acting as a fiduciary when it amended the plan to add the early-retirement incentives and waiver condition.
- Paying enhanced benefits pursuant to the amended plan did not, by itself, constitute a prohibited transaction under § 406(a)(1)(D).
- OBRA’s amendments did not apply retroactively to require Lockheed to credit Spink’s pre-1988 service.

## Legal Principles

- ERISA § 406(a)(1) prohibits only transactions that a fiduciary “cause[s] the plan to engage in”; without fiduciary causation, there is no actionable § 406(a) violation.
- An employer does not act as an ERISA fiduciary when it adopts, modifies, or terminates a plan; those are settlor (plan sponsor) functions not governed by fiduciary standards.
- Routine payment of benefits to participants under the terms of a valid plan, including an amended plan, is generally not a prohibited transfer or use of plan assets for a party in interest under § 406(a)(1)(D).
- Plan fiduciaries must administer the plan in accordance with governing documents; implementing a valid plan amendment by paying benefits as provided is not, without more, a prohibited transaction or fiduciary breach.
- OBRA’s repeal of age-based participation exclusions and related accrual restrictions operate prospectively absent clear congressional direction to impose retroactive benefit crediting.

## Conclusion

The Court held that ERISA’s prohibited-transaction rule in § 406(a) applies only to transactions caused by fiduciaries, that an employer acting in its settlor capacity may condition early-retirement enhancements on releases of employment-related claims, and that OBRA’s ERISA/ADEA amendments did not retroactively require credit for service performed before older employees became plan participants.


Lockheed Corp. v. Spink, 517 U.S. 882 (1996)