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Ex wins early retirement subsidy

By Barbara Whelehan ·
Saturday, July 13, 2013
Posted: 8 am ET

An exhaustive interpretation of a three-letter word -- "for" -- played a big role in getting a larger pension benefit to a divorced woman.

According to a recent article on, the Third U.S. Circuit Court of Appeals found that Cheryl Ann Gruber was entitled to 53 percent of the value of an enhanced subsidy for early retirement provided by her ex-husband's pension plan as part of a qualified domestic relations order, or QDRO. That court struck down an earlier ruling by the U.S. District Court for the Eastern District of Pennsylvania. The District Court had found in favor of the retirement plan and denied Gruber the enhanced benefit.

Here are some details of the Gruber v. PPL Retirement Plan case: Gruber's ex-husband, Bryn Lindenmuth, was forced to retire in March 2009 at age 57 as a result of a job layoff. Lindenmuth had worked at PPL Corp. since 1976. The layoff occurred roughly four years after his divorce from Gruber.

Gruber had secured a portion of Lindenmuth's pension under the QDRO, which she began taking at age 50 while Gruber was still employed. It amounted to a monthly check of $606.41, "representing 53 percent of the actuarial value of Mr. Lindenmuth's benefit accrued as of Dec. 20, 2004," according to the case file. The QDRO included a clause that would entitle Gruber to a recalculation of the pension amount "to include 53 percent of the value of any employer subsidy for early retirement." When her ex-husband was discharged and forced into early retirement, the QDRO prompted PPL to recalculate Gruber's benefit to include an early retirement subsidy.

Gruber's benefit was bumped up to $1,151, but according to a letter from PPL received by Lindenmuth in March 2009, it should have been increased to $2,261. The greater amount reflected a second enhanced benefit called "GP 401" that Lindenmuth received based on his years of service. However, when Gruber requested that her payments be recalculated to include her share of those benefits, her claim was denied on the basis that the enhanced benefit "was payable due to the reduction-in-force, not for early retirement." (Emphasis of the preposition is mine.)

'For' a pivotal point

Gruber then sued under the Employee Retirement Income Security Act, or ERISA, to get her share of the GP 401 benefits. Circuit Judge Thomas Vanaskie, who wrote the opinion for the court, noted, "The preposition 'for' has a plethora of meanings, one of which is the definition that the District Court applied: 'because of' or 'on account of.' … But another meaning is 'to indicate purpose,' such as a 'grant for studying medicine.'"

The Circuit Court determined that the District Court "stopped short by considering the reason for the subsidy, but not its effect. In this case, the effect of GP 401 is to enhance early retirement benefits, and it was error to interpret the preposition 'for' as meaning 'on account of.' Instead, the correct interpretation of 'for' is the purpose of the subsidy, which is to provide more substantial early retirement payments."

Besides, Vanaskie noted, PPL had notified Lindenmuth in that March 2009 letter that his ex-wife would get the $2,261 amount and that his benefits would be actuarially reduced by 53 percent because of the QDRO. PPL later argued that letter "must have been a mistake," but the court was "not persuaded," according to the written opinion.

Note that Lindenmuth was not a party to this case and didn't file anything opposing his ex-wife's arguments.

Gruber had her day in court, and her retirement will be much brighter as a result. Unlike another case I wrote about in April, where an ex-wife lost her right to pension benefits because she didn't get a QDRO, Gruber anticipated the possibility of an enhanced early retirement benefit and made it a part of her QDRO.

Her "foresight" helped immensely in her retirement planning.


Follow me on Twitter: @BWhelehan.

Barbara Whelehan is a co-author of "Future Millionaires' Guidebook," an e-book for Millennials by Bankrate editors and reporters. It is available at Amazon, Barnes & Noble, iBookstore and other e-book retailers.

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