previously. Since Oglethorpe has conceded that the Accrued Benefits Method is a reasonable method when some surplus assets exist, the Administrator was not required, under Stewart v. National Shopmen Pension Fund, to alter his procedure when assets appreciated, even if the result appears harsh.
Bearing in mind that both actuarial experts included ease of administration, consistency and cost-effectiveness among the goals of a reasonable method of calculation, it would seem appropriate to stick to a given method once it has been chosen, even if the result might work against an individual employer, so long as the employees are protected as required by ERISA. The Court concludes that refusal to distribute surplus assets at a time when the funding ratio was 174 % was not arbitrary or capricious.
(4) Consistency of Application and Notice to Oglethorpe.
Up to the time Oglethorpe withdrew, the Accrued Benefits Method had been applied consistently to the 21 systems which had withdrawn from the Program.
The substantial early withdrawal penalty created by use of the Accrued Benefits Method discourages withdrawal from the program, to say the least. But this raises the question why, then, did Oglethorpe withdraw? In response, Oglethorpe has argued that it did not know, at the time, that the amounts "held on behalf of" its employees would be calculated using the Accrued Benefits Method. Although Oglethorpe did receive a letter from R&S which explained the withdrawal process, Oglethorpe contends that the letter was ambiguous and vague. Problems with ambiguity of notice do incline in Oglethorpe's favor under the Foltz test, but it is only one of the Foltz factors and is not sufficient to overcome the weight of evidence that the Accrued Benefits Method is reasonable and was consistently applied.
For the foregoing reasons, the Court concludes that selection of the actuarial method for calculating amounts transferable to withdrawing systems under § 16.02 is committed to the discretion of the plan administrator, and should, therefore, be reviewed under the arbitrary and capricious standard. The selection of the Accrued Benefits Method by R&S is a reasonable implementation of § 16.02 because it is actuarially sound, and meets the requirements for proper administration of an ERISA fund as set forth in the case law. Use of the Accrued Benefits Method is neither arbitrary nor capricious. Accordingly, a declaratory judgment is entered to the effect that R&S's use of the Accrued Benefits Method is approved.
In accordance with the Memorandum of today's date, declaratory judgment is entered for the plaintiff.