This matter is before the court on defendants' motion for summary judgment. Plaintiffs are retired members of defendant Sheet Metal Workers Local Union #13 (union), who are currently receiving benefits from a Pension Fund (Fund) created in 1953 as a result of a collective bargaining agreement entered into between the union and an employers' association. The Fund is administered pursuant to an agreement and declaration of trust (the agreement) which provides that the employers are to make contributions to the Fund on behalf of their employees. The Fund is governed by an equal number of union and employer trustees according to rules and regulations formulated by them.
Article III of the agreement states that the pension fund created thereby is "for the exclusive benefit of the employees and their dependents" and outlines the trustees' duties and powers as including:
Under the 1953 collective bargaining agreement the rate of employers' contribution to the Fund was fixed at 3% of the wages paid to union members. This rate remained in effect through the end of 1972. In 1973 the union negotiated an increase in the employers' contributions from 3% to 5%. Thereafter, the trustees adopted a new schedule of retirement benefits for union members who retire after January 1, 1973. The maximum benefit payable to such retirees is $240 a month, whereas the maximum benefits payable to members who retired prior to January 1, 1973 remained at $127.50 a month. The pre-1973 retirees, on whose behalf this action
has been brought, were granted a temporary benefit of $20 a month to be paid for one year.
Plaintiffs commenced this action to compel the trustees to equalize the pension benefits payable to all classes of retirees and to declare the action of the trustees establishing a differential in retirement benefits to be improper. They contend that the distribution of benefits in this manner is arbitrary and capricious in that
(1) the trustees' action was contrary to past practices wherein increases in retirement benefits were granted to all eligible retirees, regardless of their date of retirement;
(2) the trustees' action was inconsistent with the purpose of the Fund to benefit all eligible retirees;
(3) the trustees had not shown any rational basis for increasing the benefits for post-1973 retirees only.
A hearing in the nature of a discovery proceeding took place in the presence of the court at which Harold W. Hauser, the Fund's consulting actuary since 1965, testified as to the past practices of the trustees with respect to increases in pension benefits. When the plan began, the maximum monthly pension was fixed at $40 a month. On March 1, 1958 the maximum monthly pension was increased to $48 for future retirees and no increase was given to those who had already retired. Two years later the benefits were increased to $62 a month for future retirees, and no increase was given to past retirees. In 1963 the pattern was repeated and future retirees received $66 a month, while those already retired received no increase.
In August 1965 all retirees received an increase in benefits. Members retiring after that date were granted pensions at the maximum rate of $100 a month, while those who had already retired received an increase up to 78% of the new rate, or a maximum of $78. For those who had retired prior to 1958 and were thus receiving $40 a month, it meant an ...