Legal Question in Business Law in California

Re: Pension

Probably not; it's very likely illegal as a violation of Business and Professions Code section 16600 which declares illegal as against public policy any contract by which anyone is restrained from engaging in any lawful business, trade or occupation.

The California Supreme Court decided the matter in the context of pension plans in Muggill v. Reuben H. Donnelley Corp., (1965) 62 Cal.2d 239, affirmed in Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937.

I cannot say with absolute certainty that suspending payments in this particular pension plan is illegal under B&P 16600, Muggill and Edwards. That would require reviewing the plan contract itself, whether California law applies, and other limitations on the doctrine espoused in the statute and cases. However, I'm pretty sure the practice is unlawful in California. Please contact me directly if interested in retaining counsel.