How does the recent U.S. Supreme Court ruling in Cigna Corp. v. Amara affect ERISA regulations? There isn’t a definitive answer yet. On the one hand, justices seemed to come down heavily on the side of the plaintiffs by opening the way for damages to be awarded. They seemed to agree that Cigna was wrong to intentionally mislead its employees about the advantages of its new cash balance pension plan: In fact, Cigna saved $10 million annually by making the plan conversion, a significant number of employees were worse off as a result of the conversion, and Cigna intentionally failed to provide individual comparisons of projected retirement benefits under both plans.

On the other hand, justices made no decision about damages. Instead, they sent the case back to the federal district court that had originally heard it. They only pointed to a particular section of ERISA under which the district judge could compensate plaintiffs. And, they instructed the judge that “likely harm” to the plaintiffs is not enough; he must find “actual harm” as the result of the misleading summary plan description (SPD) information.

It’s hard for us to imagine whether or how plaintiffs could have made other decisions had they known that the cash balance plan was much less rich than their former defined benefit plan would have been. Cigna threw in a death benefit to the new plan, but Supreme Court justices noted that that didn’t seem to be important to most retirees. And, it took away an early retirement option in the defined benefit plan—in addition to reducing the retirement income of many employees. If potential retirees had known the truth about the cash balance plan, would any protests or contests they made against the change have made a difference?

Bank of America may have been the first large corporation to convert to a cash balance plan, and it did so based on an employee attitude survey. Respondents were asked to rate the importance of various company-provided benefits. And, the bank was unhappy to find that younger employees, who were a significant portion of its workforce, didn’t care about the organization’s (very expensive) defined benefit pension plan. Those results prompted the company to convert to a cash balance plan that provided a greater advantage to younger employees with less service—at the expense of bigger benefits for long-service workers.

Courts have since found that, contrary to plaintiffs’ claims, cash balance plans do not violate the rights of older employees. For now, the only clear conclusion from this Supreme Court ruling is that SPD’s do not equal actual plans.

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