Pension Action Center

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

Pension Action Center

Low-income Rhode Island widow finally gets her survivor’s benefit thanks to years of help from center staff and volunteers

Our client, a 75-year-old Rhode Island widow living on an annual income of less than $20,000, contacted us in 2010 about a Notice of Potential Private Pension Benefit which she had received regarding a pension her late husband had earned from a small manufacturing company called P & C Quality Turned Components, Inc.  Her late husband had died at the age of 56 without receiving the pension.  The Notice stated that the value of the pension in 1988 was approximately $5,000.  Prior to hearing about the New England Pension Assistance Project at the Pension Action Center, the client had tried to track this pension down herself, and had contacted the former owner of the company, the person who had subsequently bought the company and re-named it, the pension consulting firm Mercer, several insurance companies, and the Rhode Island Attorney General, all to no avail.

After pursuing a number of these same and some other sources of information, we turned to the Pension Benefit Guaranty Corporation.  Its database showed that this plan had paid PBGC premiums until 1988, and was now listed as “inactive,” although there was no record of any plan termination.  In December of 2010, we filed a claim with the PBGC, alleging that the plan was a defined benefit plan which had never been properly terminated and that the PBGC should pay our client her survivor’s benefit, as these benefits were guaranteed by the PBGC and had never been paid to her.

The PBGC spent more than three years investigating our claim and what had happened to the plan.  We spent countless hours answering its questions, and attempting to get some resolution.  At one point in July 2013, the agency informed us that it had been “unable to locate any evidence of the existence of this pension plan.”  No one had been able to locate a copy of a Summary Plan Description for the plan, although we had requested this information from the Public Disclosure Room of the U.S. Department of Labor.

We responded immediately that we had submitted evidence that the plan had paid premiums to the PBGC for 12 years, and again provided the plan number to the PBGC.  We further requested any documents which showed whether or not the plan had ever requested a refund of the premiums paid, as a member of the PBGC’s legal staff suggested that the plan may have paid premiums in error.  In October of 2013, we replied to these issues, including copies from the PBGC’s own databases of the premium payment history, and reiterating that there was no evidence that the plan had ever sought a refund, and arguing again that the plan was clearly a defined benefit plan which had not been properly terminated.

In January of 2014, we reached out to the PBGC’s Participant and Plan Sponsor Advocate, Constance Donovan, about the lack of a resolution in this case. She, in very short order, was able to locate the SPD in the Department of Labor’s archives, and it clearly showed that the plan was in fact a defined benefit plan.  Through her intervention, the PBGC ultimately agreed to pay our client her survivor’s benefit.  Our client received a lump sum of over $9,300 in April of 2014, three years and four months after we filed the claim on her behalf.

As this case so clearly demonstrates, our client needed the Project’s expertise, knowledge and diligence to make sure that the PBGC interpreted the records correctly and paid our client the benefits to which she was entitled.  Due to the complexity of the matter, the confusing documentation, and the procedural issues in dealing with the agency, it is extremely unlikely that she would have been able to pursue it on her own or could have found any other attorney, agency, or organization to assist her.  Without the assistance of the Project, our client would most certainly not have received the survivor benefit her late husband had earned for her.

Union Pension Fund Demands That Retiree Pay $2,000 (Plus Nearly $8,000 Interest!) For a Supposed Overpayment

In a previous article, “Unfair Pension Takebacks,” we discussed what happens when pension plans mistakenly pay retirees the wrong benefit amounts for months or years before discovering their mistake. Many clients contact us when, out of the blue, they receive a letter from the pension fund telling them that their monthly benefits will be cut so that the plan can recover the overpaid amount, and sometimes also demanding that the retiree pay back a large lump sum as well. Many retirees from Illinois received letters like this from their union pension fund, Sheet Metal Workers Local 73, this past summer, and contacted the Illinois Pension Assistance Project for help. We worked on many of these cases throughout the summer and fall of 2013.

Just a few months ago, a 75-year old retired mechanic who was in Local 73 called us because he had recently received a similar letter. His letter stated that, approximately 20 years ago, he had received four checks of about $540 each that he should not have received. The pension fund now wanted him to pay back this $2,000 and also wanted him to pay an additional $7,800 in interest for the 20 years since he had allegedly received this money. The letter further explained that the pension fund would therefore be lowering his pension by over $125 each month to recover this amount – which totaled $10,000 when the interest was added to the “overpayment.”

Fortunately for us and for the client, he had kept meticulous records over the years. Because of this, we were able to show that the pension fund had made yet another mistake: He had never actually received any pension funds from the plan in 1993 and 1994!! The fund had sent him checks that he was able to prove he had returned uncashed. We filed an appeal on our client’s behalf and proved that he had never been overpaid. Once the fund reviewed our appeal and evidence, it agreed that our client did not owe any money, restored his monthly pension to the correct amount, and sent him a check refunding the amount it had already withheld.

This client was lucky that the documents he had kept over the years allowed us to dispute the fund’s obvious error. And he was lucky that the Illinois Pension Assistance Project was able to file an effective appeal on his behalf free of charge.

If you would like to request assistance from the Illinois Pension Assistance Project or the New England Pension Assistance Project, please contact us directly by calling 888-425-6067.

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.”

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