By Thomas Lamb, Albany Government Law Review
ERISA’s Standard for Fiduciaries
In December of 1963, the Studebaker-Packard Corporation shut down its plant in South Bend, Indiana, giving rise to one of the most “glorious stor[ies] of failure in business.” At the time of the plant’s closing, the pension fund for hourly workers was about as broke as the rest of the company. Participants enrolled in Studebaker-Packard’s retirement plan whose benefits had vested received their full pension; but the plan did not have enough funds to honor what it had promised younger participants whose benefits had not yet vested. “Some received a lump-sum payment worth a fraction of the pension they expected, and others got nothing at all.” Thousands of employees were left without compensation for years of contributions, and also without a legal remedy.