Pension Action Center

Read about clients helped by the center's services and about current issues in the pension field

Pension Action Center

Massachusetts Man Denied His Retirement Benefits Due to Frequent Changes in His Employer’s Name and ID Number

Our client, a 70-year-old man from Central Massachusetts, told us that he had worked as a tool and die setter for a manufacturing company called North & Judd in New Britain, Connecticut, from about 1969 to 1980 or 1981, but had never received his pension and did not know who to contact about it. We opened a case and began to investigate in May of 2011. We very quickly determined that the North & Judd plan had been terminated and was trusteed by the Pension Benefit Guarantee Corporation (PBGC). We helped the client to file a claim with the PBGC, which asked him to provide Social Security Detailed Earnings in support of his claim, since it had no information regarding client’s benefit status.

In May of 2012, the PBGC denied the client’s benefit claim because the Social Security Earnings listed his earnings under four different employers with four different Employer Identification Numbers (EINs), and all these were different from the number of the trusteed plan. The employer’s name was variously listed as North & Judd Manufacturing, North & Judd, Inc., Gulf & Western Manufacturing, and Gulf and Western Precision Engineering. The PBGC therefore concluded that he was not vested in the North & Judd Inc. UAW Pension Plan, which it trusteed.

Refusing to let this retiree be denied the benefits he had clearly earned, we appealed the PBGC’s decision to its Appeals Board, after obtaining PBGC premium payment history records through two Freedom of Information Act (FOIA) requests, compiling corporate records from the State of Connecticut, and other corporate information sources.  We argued that detailed analysis of the premium payment history tied Mr. Moore’s earnings information to the records of the trusteed plan’s payments, and that evidence in the PBGC’s records showed the merger from one EIN to another, and the change to the third number. This appeal was filed in July of 2012.

In July of 2013, we received a favorable decision from the Appeals Board. It concluded that North & Judd had been a subsidiary of Gulf & Western and that the employer had sometimes filed reports such as SSA earnings, PBGC premiums, or Form 5500s under the parent corporation or the subsidiary, but that all of our client’s years of employment should have been counted under the trusteed plan.

The client was found eligible for a monthly benefit of $134.21 retroactive to 2006, when he had reached Normal Retirement Age. The present value of this pension is over $29,000! This is money that can help pay for basic living expenses, like groceries and heating bills. It is unlikely that the client would have received his retirement benefits without the help of project staff.

Unfair Pension Takebacks

Picture this – you or your spouse or one of your parents have been retired for many years, maybe more than a decade or two, and have been receiving a regular monthly pension check which you expect will be paid for the rest of your life.  Whether it’s a small amount that supplements some other income sources, or whether it’s the main source of your retirement income, it’s a piece of your retirement financial security that you have been counting on for years. 

One day, out of the blue, you receive a letter from the pension fund telling you that you’ve been receiving the wrong amount all these years.  The plan tells you that you have been overpaid by thousands of dollars through no fault of your own, but due to errors the plan made when it calculated your pension amount.  The letter goes on to tell you that your pension is being lowered not once, but twice – first, to the correctly-calculated amount, and then by some additional percentage -25% or even more, so that the plan can recover the amounts it overpaid.  In addition to that, the letter asks you to pay a large lump sum within a month,  because, according to the plan’s actuaries, the plan does not expect to recover all the money it overpaid  you before you die! 

This nightmare scenario is, unfortunately, becoming more and more common, and has prompted numerous calls to us in the past few months.  One large pension fund in Illinois, for example, recently sent out letters like this to over 500 retirees, asking for repayments in the tens of thousands from individual retirees who the plan claims were paid the wrong benefits for decades.  The Illinois Pension Assistance Project is currently helping a number of these people.  We are asserting that the plan’s recovery efforts are inequitable due to the fact that none of these retirees were at fault , that the overpayments were completely the result of the plan’s errors and failure to corrects its own errors for so many years, and that the plan’s recovery efforts would create severe financial hardship for these retirees. 

Plans justify these recoupment actions by claiming that the plan has a fiduciary duty to collect overpayments on behalf of all other participants in the plan.  Unfortunately, given the state of the law right now, many pension plans feel they can write their own rules when it comes to overpayments.  Some plans just lower the benefit amounts with little or no warning to retirees and with no formal process for challenging the plan’s actions.  Although a Department of Labor Advisory Opinion  specifically authorizes a plan administrator to consider financial hardship to the retiree in these situations, this guidance does not seem to be widely known, and does not set any specific, objective limitations on a plan’s ability to recoup. The only standard it sets is highly subjective , and does not define the type or level of hardship a retiree should show to get relief.  There is a body of case law that supports our position that a plan must look at all of the equitable factors before undertaking any recoupment, but this is also subject to interpretation.

In the lack of more clear and definite guidance in this area, plans take widely varying approaches.  We have succeeded in getting some plans to waive some or all of the overpaid amounts, but we have also had plans fail to even acknowledge that these issues are subject to formal claims and appeals procedures.  Plans and participants would all benefit from having more definitive guidance in this area.  Some of the proposals over the years have included time limitations on a plan’s ability to recover overpaid amounts, a requirement that financial hardship to the retiree be considered, along with some definition of financial hardship, a limitation on the monthly amount which can be recouped, and clarification of the procedures by which a retiree can challenge a plan’s recoupment action.

Overpaid benefits present a difficult situation for both plans and participants.  Plans need to balance their duties to an individual participant with their duty to all participants, while retirees should not be subjected to unexpected and excessive financial burdens created by a plan’s mistake.  While we will continue to strive to help our individual clients with these cases, we see the need for more definitive guidance setting  appropriate limits on a plan’s ability to recoup these overpaid amounts.

Illinois Pension Assistance Project Helps to Find Lost Pensions for Clients

The Illinois Pension Assistance Project (IPAP) has recovered nearly half a million dollars in pension benefits for clients since its inception in July of 2012. One of the project’s areas of expertise is finding lost pensions. Workers and retirees can lose track of their pension benefits since, over time, companies may have gone bankrupt or changed ownership through mergers and acquisitions. Therefore, it is not uncommon for these companies’ retirement benefits to become lost.

For example, a 52-year old Illinois resident recently contacted IPAP asking for help locating his pension. The company he worked for from 1984 – 1999 had gone out of business and he did not know who to contact regarding his retirement benefits. The only documentation that the client had was a statement that he had received in 1995 stating that his pension plan had been frozen, as of December 31, 1994, and that he was entitled to a monthly pension at age 65.

The case was assigned to Teresa Ryan, one of the pension counselors on staff. She began to research his former employer, Sullivan Graphics. She found out that the company had changed its name to American Color Graphics in 1997 and, as of 2008, had been a subsidiary of Vertis Holdings. Vertis filed for bankruptcy in 2012. Due to the bankruptcy, The Pension Benefit Guaranty Corporation had trusteed the plan. Teresa was able to obtain the summary plan description and other information about the client’s benefits.

Teresa informed the client how he could obtain his benefit. It is estimated that he will be eligible for a retirement benefit of $512.98 per month at age 65. It would have been very difficult for the client to navigate his way through the investigative process that led to this positive outcome. Our client can now look forward to a more financially secure retirement.

Corporate Mergers Make Claiming Pension Difficult for Massachusetts Woman

The New England Pension Assistance Project recently assisted  a 60-year-old woman from Waltham, Massachusetts, who was having difficulty claiming her pension benefits due to a series of corporate mergers and acquisitions. She had worked for the GTE Corporation at two separate periods of time. During those years, there were a number of corporate changes. She was aware that the company had merged with Bell Atlantic.

Her Detailed Earnings Report showed her employer as “Genuity” for a certain period and the entity responsible for the pension was now, she thought, Verizon. She also had a break in service of 11 years between the two periods when she was in these jobs, but believed that there had been some agreement that all of this service would be “bridged”.

After a lengthy investigation and communications with Verizon and Genuity, Verizon initially denied that all of the client’s work should be recognized for pension vesting and credit. We appealed this decision and ultimately prevailed. Verizon agreed that the client is entitled to a pension of $432 per month when she reaches age 65. The present value of this benefit is over $54,000 and the anticipated lifetime benefit is over $100,000.

It is very unlikely that our client would have been able to get this pension without our assistance, as all the corporate changes and insufficient communication among the corporate successors made it very difficult to piece this all together.

Union Misinterprets ERISA Provision and Improperly Denies an Illinois Retiree’s Pension

A 58-year old Teamster contacted the Illinois Pension Assistance Project because the union pension fund had denied him benefits. The individual had been a member of Teamsters Local 734 and had worked in union covered employment at Hostess from 1987 through 1994. Hostess was a contributing employer to the Local 734 Pension Fund. In June 1994, the man transferred from his union job to a management position with Hostess and remained in that position through 1997. When he inquired into his pension, Local 734 told him he was not vested because he left union covered employment before earning 10 years of service.

 

Upon reviewing the client’s documents, we realized that Local 734 was misinterpreting the Employee Retirement Income Security Act (ERISA)’s provision for “contiguous non-covered service” and had improperly denied our client’s pension. Under ERISA, a union plan participant continues to earn vesting service if he transfers to a non-union job with a contributing employer as long as there is no quitting or discharge between the periods of union and non-union covered employment.  

 

Since our client had worked continuously for 11 years in both union and non-union covered employment with Hostess, he should have received vesting credit for all of his service. Additionally, his 11 years of service clearly exceeded the plan’s 10-year vesting requirement. We wrote to the union pension fund and clarified that from 1994 through 1997, our client worked in contiguous non-covered service for which he should have received vesting credit. Local 734 reversed its earlier benefit denial and affirmed that our client was eligible for a pension.  

 

Starting at age 65, our client’s will receive a lifetime annuity of $225 per month. The present value of our client’s pension is $25,544.27! 

Illinois Man Couldn’t Find the Pension He Earned 29 Years Ago

A 64-year old former employee of Caterpillar contacted the Illinois Pension Assistance Project for help finding a lost pension. A pension becomes lost because a company, has moved, been acquired, merged, or gone out of business. When this happens, former employees approaching retirement age don’t always know how to collect the retirement benefits they earned.

The client worked for Caterpillar from 1972 through 1984 and was told when he left service that he was vested in a pension. However, 29 years later, as he approached age 65, the client was not sure whom to call for information about his benefit.

The Illinois Pension Assistance Project’s staff is experienced in assisting clients with finding current information on who is administering their pension. We gave the client Caterpillar’s contact information and he received a benefit calculation showing that he will receive a lifetime benefit of $220 per month at age 65 in August, 2013. The present value of our client’s pension is $34,083.68!

Illinois Pension Assistance Project Helps 68-Year-Old Woman Obtain Lifetime Pension Benefit

A 68-year-old Illinois woman contacted the Illinois Pension Assistance Project because her former employer, Solo Cup Company, informed her that she would not be receiving a pension, despite telling her some years earlier that she was eligible for a benefit. The woman had two periods of service with Solo Cup. She worked for Solo Cup for three years in the 1960s, was absent for eight years, and then came back for approximately ten years from 1978 through 1988. Solo Cup argued that the woman incurred a permanent break in service and forfeited her first three years of employment.

When she returned to work, according to Solo Cup, she did not have exactly ten years of vesting and therefore failed to earn a pension. Luckily, the client kept all the letters she had received from Solo Cup since her employment with them ended in 1988, including those stating she was eligible for a benefit.

The Illinois Pension Assistance Project wrote to Solo Cup and requested documents about our client’s benefit. Upon receiving our letter, Solo Cup immediately reversed its most recent determination and reaffirmed that the client was pension eligible. The client will soon begin to receive a lifetime benefit of $112 per month!

Widow Denied Late Husband’s Pension, Because He’d “Remarried.” The Problem? They’d Never Gotten Divorced!

Mrs. A, a Connecticut resident, contacted the New England Pension Assistance Project (NEPAP) for help with her survivor benefits from the Railroad Retirement Board. Mrs. A’s late husband was a long-time employee of the railroad. Mrs. A and her husband lived apart for the last decade of their marriage, but never got divorced.

Before finding NEPAP, Mrs. A tried to apply for survivor benefits on her own, but the Railroad Retirement Board denied her application. They told Mrs. A that her late husband had allegedly gotten remarried and that his second wife was entitled to survivor benefits. Mrs. A was confused because she and her husband had never been legally divorced! If anyone was entitled to survivor benefits from the railroad, Mrs. A knew she should be receiving them.

NEPAP filed a claim for benefits on Mrs. A’s behalf and after six months of waiting, the Railroad Retirement Board approved our claim. Mrs. A received a one-time retroactive lump-sum payment of $29,263.20 and subsequently began to receive a monthly survivor benefit of $1,259, to be paid for the rest of her life. The overall lifetime value of Mrs. A’s benefits is $249,253.19! Mrs. A wrote at the conclusion of her case, “I was very fortunate to have been assisted by the New England Pension Assistance Project.”

Improper Plan Administration Almost Costs Widow Her Survivor’s Benefit

The New England Pension Assistance Project recently assisted a 76-year old widow in Stamford, Connecticut. She was living on a modest income and having difficulty obtaining her survivor’s benefits from her late husband’s pension plan. Her husband had died in 2010 at the age of 79 without ever receiving his pension.

The client called us in April of 2011 because she had paperwork showing that her husband was vested in a pension sponsored by the Bunker-Ramo Company, which had been acquired by Honeywell long after his employment had ended. She had contacted Honeywell on her own and had been told she was not entitled to any benefit.

When we contacted Honeywell on the client’s behalf, we were told that the client was ineligible for a survivor benefits because her late husband had failed to file an election form giving her a Qualified Pre-Retirement Survivor Annuity. We realized immediately that this answer was completely inconsistent with the Retirement Equity Act (Section 205 of ERISA), which required that the 50% survivor annuity be the automatic form of benefit payment for any vested participant who was alive on August 23, 1984, and whose benefits were not yet in pay status on that date. It was shocking that the pension administrator was acting in a manner so blatantly incorrect in an area of well-settled law.

We filed a claim for survivor’s benefits in late August 2011, and anticipated a decision within the 90-day framework dictated by ERISA. When we did not receive a response within that period, we began a series of letters and telephone calls that ultimately led to Honeywell admitting in December 2011 that our claim was received. In May of 2012, Honeywell finally agreed to calculate and pay our client the survivor’s benefit retroactive to the date of her late husband’s death.

The retroactive lump sum and the ongoing monthly lifetime benefit, with a projected lifetime value of over $27,000, will have a significant impact on our client’s life and on her economic security.

The Pension Action Center Keeps Up the Fight for Pension Rights

On April 27, 2012, the Pension Action Center wrote to the Internal Revenue Service to advocate for the pension rights of American workers and retirees. The Pension Action Center’s letter was prompted by a request from the American Society of Pension Professionals and Actuaries (ASPPA) that plans be relieved of their legal obligation to notify departing workers of their right to a pension. Click here to read the full text of the Pension Action Center’s letter.

Up until now, the Internal Revenue Code has required pension plans to give departing workers a notice if they have earned a right to a pension. This notice must state how much a worker will receive in pension benefits, how frequently those benefits will be paid, and who is responsible for paying them. ASPPA, which represents the interests of pension plans, sent a letter asking the IRS to relieve pension plans of this requirement.

Notifying departing workers of their right to a pension serves three important purposes. First, the notices inform American workers how much they will receive in pension benefits when they retire. Second, the notices provide clear evidence that a pension plan has deemed an individual entitled to pension benefits. Third, these notices help workers plan for retirement. The Pension Action Center urged the IRS to maintain its existing rule.

The Pension Action Center hopes that the IRS will agree with its interpretation of the law and continue to enforce the right of American workers to receive information about their pension benefits.

The Pension Action Center, part of the Gerontology Institute at UMass Boston, advocates on behalf of pension plan participants and strives to improve their economic security in retirement. The Pension Action Center houses the New England Pension Assistance Project, a pension counseling project funded by the U.S. Administration on Aging that represents workers and retirees in their claims for benefits. Because of its clear focus, the Pension Action Center is a one-of-a-kind organization in New England and is in a unique position to appreciate the importance of these pension notices to American workers and retirees.

Click here to read the full text of the Pension Action Center’s letter to the IRS. For more information on services provided by the Pension Action Center, visit http://www.umb.edu/pensionaction or call 617.287.7307 or 888.425.6067 (toll free). Stay updated on the Pension Action Center’s activities by following them on Twitter at www.twitter.com/pensionaction.

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