Telephone company employees filed a lawsuit asserting that the telephone company’s practice of reimbursing those retirees who live outside of the employees’ service area for their telephone expenses constituted a defined benefit pension plan and that telephone company failed to follow ERISA regulations for pension plans, including those related to funding, vesting, and disclosure requirements. At the federal district court level, the court granted summary judgment to the telephone company, concluding that the telephone company’s practice of offering discounted telephone services to employees and retirees is not a pension plan, in whole or in part. The case was appealed, and the Fifth Circuit Court of Appeals recently affirmed the judgment of the district court. The parties agreed the telephone benefits did not constitute a welfare plan. Therefore, the only question for the Fifth Circuit to decide was whether the telephone benefit, in part or in whole, is a pension plan. In affirming the decision of the district court, the Fifth Circuit, among other things, rejected the employees’ argument that the telephone benefit is a pension plan under ERISA because it “provides retirement income.” To provide retirement income for ERISA purposes, a plan must be designed for the purpose of providing retirement income. In this case, the Fifth Circuit concluded that although the telephone benefit does provide taxable income to some out-of-region retirees, that income is incidental to the benefit. The “primary thrust” of the telephone benefit is to provide retirees with discounted phone service, which a vast majority of the beneficiaries received as a no-additional-cost service. The Fifth Circuit also rejected the employees’ argument that the telephone benefit, when viewed as to all retirees, results from a deferral of income. To show that the telephone benefit results from deferred income, the Fifth Circuit ruled that the employees had to show they forewent income at some point in exchange for receiving income from concession at a later date, which the court ruled they failed to do. (Boos v. AT&T Incorporated, 5th Cir. 2011)