A split Third Circuit panel on Friday rejected a former Union Pacific employee's challenge to the calculation of his retirement payout, saying plan administrators should receive deference when interpreting ambiguous pension plan terms.

In a precedential opinion, the majority affirmed a lower court decision not to overturn a plan administrator’s interpretation of the pension plan terms of John Dowling, a former Union Pacific Corp. worker who had been on disability leave and argued his benefits had been calculated at a too-low rate.

"In such circumstances, we will not set aside the administrator’s interpretations of 'unambiguous plan language' as long as those interpretations are 'reasonably consistent' with the plan's text, and we will only disturb the administrator's interpretations of ambiguous plan language when those interpretations are 'arbitrary and capricious,'" the majority said.

U.S. Circuit Judges Thomas Ambro, Thomas Hardiman and Thomas Vanaskie sat on the panel for the Third Circuit.

Dowling is represented by Oldrich Foucek III and Kelly S. Watkins of Norris McLaughlin & Marcus PA.

The pension plan is represented by Christopher T. Cognato and David S. Fryman of Ballard Spahr LLP.

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