The opinion of the court was delivered by: MARSHALL
PRENTICE H. MARSHALL, UNITED STATES DISTRICT JUDGE
Sections 9201-04 of the Omnibus Budget Reconciliation Act of 1986, Pub. L. No. 99-509, 100 Stat. 1874, 1973-80 (1986) ("OBRA") amended the ADEA and ERISA to unequivocally
require full pension credit for employment after normal retirement age. Plaintiffs and defendant both move for summary judgment on the following issues pertaining to these amendments: (1) whether the OBRA amendments require credit for employment after the normal retirement date but prior to the OBRA effective date with respect to United's Fixed Benefit Retirement Income Plan ("Fixed Plan"); and (2) whether the amendments became effective on January 1, 1988 pursuant to the "general" rule in OBRA § 9204(a)(1), or on January 1, 1989 (Fixed Plan) and December 1, 1988 (Directed Account Plan) pursuant to the "special rule for collectively bargained plans" in OBRA § 9204(a)(2)(B). For the following reasons, we grant summary judgment in favor of plaintiffs on the first issue and in favor of defendant on the second.
A. Treatment of Pre-OBRA service under the Fixed Plan
OBRA section 9201 added the following prohibition to the ADEA:
It shall be unlawful for an employer . . . to establish or maintain an employee pension benefit plan which requires or permits . . . in the case of a defined benefit plan, the cessation of an employee's benefit accrual, or the reduction of the rate of an employee's benefit accrual, because of age. . . .
Section 9202(a)(2) adds an analogous prohibition to ERISA.
The effective dates and applicability of these amendments are set forth in section 9204:
The amendments made by sections 9201 and 9202 shall apply only with respect to plan years beginning on or after January 1, 1988, and only to employees who have 1 hour of service in any plan year to which such amendments apply.
With regard to employment prior to the effective date, the IRS has announced that its final regulations will adopt the position taken in its previously issued proposed regulation: "for a participant who has at least 1 hour of service for the plan sponsor in a plan year beginning in 1988 or thereafter, a defined benefit plan may not disregard any years of service, including years of service before 1988, because of age in determining the participant's plan benefit." I.R.S. Notice 88-126, 1988-52 I.R.B. 6 (emphasis added); see Prop. Treas. Reg. 1.411(b)- 2(f)(1)(ii), 53 Fed. Reg. 11884 (April 11, 1988). Under this interpretation, United may not exclude employment after age sixty in applying the fixed plan's benefit formula to those employees employed after the effective date of OBRA.
United asks us to reject the IRS position. It argues that the IRS interpretation makes the OBRA amendments retroactive and therefore "adds" to the statute rather interprets it. We disagree. While different interpretations may be tenable, we believe the language of section 9204 supports the analysis adopted by the IRS: When an employee retires in a plan year beginning on or after January 1, 1988, the OBRA amendments shall govern the terms of his pension benefits. The amendments prohibit, with regard to that employee, a benefit plan that reduces the rate of accrual based on age considerations. Therefore, the benefit calculation must, in order to comply with the now applicable law, include all years of service when calculating the benefit amount.
United contends that this reading violates the "severe restrictions courts place on imposing laws retroactively." We agree that statutes are presumed to operate prospectively only, see e.g., United States v. Kairys, 782 F.2d 1374, 1381 (7th Cir. 1986), cert. denied, 476 U.S. 1153, 90 L. Ed. 2d 703, 106 S. Ct. 2258 (1986), but we are not persuaded that the IRS interpretation amounts to retroactive application of the OBRA amendments. An employee's benefit amount is calculated with the formula existing at the time of the employee's retirement, not with a formula that existed at the beginning of or during the accrual period. See, e.g., Fay 1/11/88 aff., ex. 1 at §§ 5 & 6, ex. 6, ex. 7, ex. 10. The IRS interpretation merely applies current law to the operative formula; it does not become a retroactive application of the law simply because that formula includes variables dependent on past events. It is illustrative to note that the IRS interpretation does not provide that employees who retired prior to 1988 and receive benefits calculated in a discriminatory manner must now receive adjustments.
United also contends that the pertinent legislative history supports its position. It points to a proposed version of § 9204 which stated:
the amendments made by this subtitle shall apply only to employees who are employed after December 31, 1988. In the case of such employees, such amendments shall apply to accrual computation ...