Pension Action Center

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October 31, 2016
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The PBGC and Omitted Participants

The Pension Benefit Guaranty Corporation is an agency which guarantees the benefits payable by defined benefit pension plans when those plans fail or are terminated. When the plan has insufficient assets to pay all the benefits it owes, the PBGC actually steps in and directly pays those benefits to the retirees. In cases where the plan is deemed to have sufficient assets, the PBGC plays a much smaller role. In these cases, called “standard terminations”, it allows the plan to either pay out immediate lump sums or to buy an annuity with an insurance company to pay the retirees’ benefits when those retirees reach retirement age. In most of these cases, the PBGC relies on the employer’s records that it has paid out, or bought an annuity for, everyone who is vested under the plan.

What happens if the pension plan has made mistakes, if its records are incomplete, and fail to take into account everyone who is due a benefit under the terminating plan? Two of our recent cases illustrate just that point.

In one of the cases, a woman whose husband had died at age 49, years before he was eligible for a benefit and years before the plan was terminated, finally received a survivor benefit of almost $700 monthly after we worked on her case for close to a year and a half. In the second case, a 70-year-old Massachusetts man received his long-overdue benefit of just over $200 per month.

In both of these cases, we worked for months to figure out what had happened to the pension plans after a number of corporate changes. We ultimately found in both cases that a successor company had applied for a standard termination through the PBGC. We then spent months assembling the documentation showing that each of these clients had a vested benefit; that no pension benefit had been paid to the client at any time, either when the employment had ended, or at the time of the plan termination; and that no annuity had been bought for payment of the client’s benefit. We refer to these clients as “omitted participants”, because they were omitted from the information the plan provided to the PBGC.

The PBGC generally relies on the plans to provide accurate information that all vested participants have been taken into account. However, it does remain liable, as a matter of law, for anyone who has been improperly omitted. We have found that is a very steep uphill battle to get the PBGC to pay benefits to these omitted participants, as it assumes that everyone entitled to a benefit has been accounted for. We need to assemble a body of rock-hard evidence to succeed in these cases. Fortunately, our experienced staff understands the issues well, and knows the evidence the PBGC will require.

Kudos to Maureen Egan and to Kevin Medeiros, who handled these cases expertly, and got our clients the benefits they may never have received without Pension Action Center!

Retirees who live in, or worked in, Illinois can rest assured that they will continue to have access to free pension counseling services thanks to a fifth year of funding from The Retirement Research Foundation. The Pension Action Center was recently notified that it is to receive a grant of over $124,000 in October of 2016 from the RRF to continue this important work.

The Pension Action Center began the Illinois Pension Assistance Project in July of 2012 through a grant from the RRF. To date, the Illinois Pension Assistance Project has served over 900 people and recovered over $2.5 million in benefits. This work has been funded through grants from the RRF and from the U.S. Administration for Community Living/Administration on Aging.

Pension Action Center Director Jeanne Medeiros said, “We are absolutely delighted that The Retirement Research Foundation has awarded us this grant. We are so happy that we will continue to provide free and expert legal assistance for people in Illinois. There is no other entity that provides this type of service for people in Illinois who have questions or problems with their pensions. IPAP is really meeting a legal need that is otherwise unmet by the private bar or other advocacy groups.”

Individuals looking for help from the Illinois Pension Assistance Project may call toll-free at 1-888-425-6067, or fill out an online request for assistance at www.umb.edu/pensionaction.

Thank you, Retirement Research Foundation!

August 24, 2016
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The PBGC and Omitted Participants

The Pension Benefit Guaranty Corporation is an agency which guarantees the benefits payable by defined benefit pension plans when those plans fail or are terminated. When the plan has insufficient assets to pay all the benefits it owes, the PBGC actually steps in and directly pays those benefits to the retirees. In cases where the plan is deemed to have sufficient assets, the PBGC plays a much smaller role. In these cases, called “standard terminations”, it allows the plan to either pay out immediate lump sums or to buy an annuity with an insurance company to pay the retirees’ benefits when those retirees reach retirement age. In most of these cases, the PBGC relies on the employer’s records that it has paid out, or bought an annuity for, everyone who is vested under the plan.

What happens if the pension plan has made mistakes, if its records are incomplete, and fail to take into account everyone who is due a benefit under the terminating plan? Two of our recent cases illustrate just that point.

In one of the cases, a woman whose husband had died at age 49, years before he was eligible for a benefit and years before the plan was terminated, finally received a survivor benefit of almost $700 monthly after we worked on her case for close to a year and a half. In the second case, a 70-year-old Massachusetts man received his long-overdue benefit of just over $200 per month.

In both of these cases, we worked for months to figure out what had happened to the pension plans after a number of corporate changes. We ultimately found in both cases that a successor company had applied for a standard termination through the PBGC. We then spent months assembling the documentation showing that each of these clients had a vested benefit; that no pension benefit had been paid to the client at any time, either when the employment had ended, or at the time of the plan termination; and that no annuity had been bought for payment of the client’s benefit. We refer to these clients as “omitted participants”, because they were omitted from the information the plan provided to the PBGC.

The PBGC generally relies on the plans to provide accurate information that all vested participants have been taken into account. However, it does remain liable, as a matter of law, for anyone who has been improperly omitted. We have found that is a very steep uphill battle to get the PBGC to pay benefits to these omitted participants, as it assumes that everyone entitled to a benefit has been accounted for. We need to assemble a body of rock-hard evidence to succeed in these cases. Fortunately, our experienced staff understands the issues well, and knows the evidence the PBGC will require.

Kudos to Maureen Egan and to Kevin Medeiros, who handled these cases expertly, and got our clients the benefits they may never have received without Pension Action Center!

June 24, 2016
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Rhode Island Man Receives Retroactive Lump Sum of $17,000

A 71-year-old Rhode Island man with limited English proficiency contacted us with a problem involving the insurance company responsible for his pension. The client had only applied for his pension recently due to the language barrier and other issues, but the plan’s Normal Retirement Age for benefit eligibility was 65. When he asked about getting the pension paid to him retroactive to 65, he was told that this would absolutely not be done and that he was “lucky” to get a few months of retroactive benefits.

After he contacted us, we filed a claim on his behalf with the insurance company, arguing that the client’s benefit was non-forfeitable once he reached retirement age, and that the company was therefore required to pay him his full benefit retroactive to age 65. As a result, the client received a retroactive lump sum of over $17,000.

June 24, 2016
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Connecticut Woman Receives Lifetime Benefit Valued at Over $44,000

The New England Pension Assistance Project recently helped a Connecticut woman with an unusual pension problem. She came to us a few months after she had retired from a manufacturing company at the age of 71, after having worked there for 46 years. The pension plan had been frozen in 1999, when she had 33 years of service. Her concern was that she was being told that her monthly benefit at age 71 wages the same benefit that would have been payable to her at age 65, and the client did not think this was fair.

We researched the issue, and determined that, although a plan is allowed to “permanently suspend” a pension benefit until the participant stops working for the plan sponsor, it can only do so if it notifies the participant of this fact, and explains that by continuing to work for the company, the employee is permanently forfeiting the benefits that would have been payable had she retired at Normal Retirement Age. This is required by Section 203(a) (3)(B) of ERISA, and was also specified in the plan document.

Our client had never received any such notice from the plan, and the plan could not prove that it had ever sent her any notice. We therefore filed an appeal arguing that the client was entitled to have her benefit actuarially adjusted to account for the benefits she had not been paid from age 65 to age 71. The plan agreed with our argument, and increased the client’s benefit by $280 per month, or an expected lifetime value of over $44,000.

May 13, 2016
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Strategic Planning Group Meeting Notes

The Pension Action Center is currently engaging in a Strategic Planning Process, and we have convened a national panel of experts, including retirement researchers, human resources experts, ERISA attorneys, and pension advocates, to assist us in this effort. The group’s first meeting took place on February 24th, 2016.

May 13, 2016
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$81,000 in Pension Survivor’s Benefits Recovered for Illinois Widow

Mrs. A was a moderate-income 67-year-old widow. Her late husband had worked at the Bellcore Research Center in Lisle, Illinois, for 15 years, from 1980 to 1995. Bellcore was part of the Bell System, and went through many subsequent changes in ownership and identity after her husband’s employment ended. It was acquired provisionally by SAIC (Science Applications International Corporation), then Telcordia Technologies, and much later by Ericsson. Each of these changes involved geographical relocations as well.

Mrs. A’s husband had died in 2002 at the age of 52, so he never received the pension he had earned from this employment. She had a condolence letter that she had received from “Telcordia Technologies, an SAIC Company” in 2003 telling her that she would be eligible for a survivor benefit of $340. monthly in November 2015, which is when her late husband would have turned 65. Of course, in 2015, she could not find Telcordia or her late husband’s pension plan.

After opening the case and investigating the multiple changes in ownership and location, we were able to locate Mrs. A’s survivor benefit at Ericsson, the successor. As a result, she has begun receiving survivor benefit from the pension her husband had earned. The expected value of these benefits over her lifetime is over $81,000.

“Lights, Camera, Action!”

The Pension Action Center recently expanded its investor education initiative beyond its fact sheets by producing an educational video to help workers prepare for a secure retirement. In the video, Jeanne Medeiros, JD, director of the PAC and Emily Brown, JD, Staff Attorney, interview PAC Advisory Board member, Glenn Frank, a financial planning expert, who covers basic investment concepts such as return on investments, asset class selection and asset class capture. The goal of the video is to educate workers and retirees who are faced with the responsibility of having to manage their own retirement portfolios.

Glenn Frank is a personal financial planner at Lexington Wealth Management, and professor at Bentley University’s Graduate Financial Planning Program. Glenn has been both a practitioner and an educator for over 25 years. He was listed by Worth Magazine for 10 years in a row as 1 of the top financial advisors in the US – Professor Frank has been quoted many times in the Wall Street Journal, Readers Digest, Investment News, The Boston Globe, and other media sources.

The PAC Investor Education Initiative is made possible thanks to a grant from the Investor Protection Trust, a nonprofit organization devoted to investor education, and support from the Secretary of the Commonwealth of Massachusetts.

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.

September 17, 2015
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Pension, Expected Lifetime Value of $57,000, Found for Long Suffering Worker

“What’s That Sound?”

The New England Pension Assistance Project recently helped a 68-year-old African-American man living in Bridgeport, Connecticut to get benefits long overdue to him. Before getting this pension, our client’s only income was his monthly Social Security check. He had worked in the Remington Arms factory in Bridgeport for about 15 years up through the early 1980s. He was referred to us last year in late summer by Connecticut Legal Services because he did not know how to find the pension he had earned from this job.

Remington is now headquartered in North Carolina, and our research showed that it is a wholly-owned subsidiary of the Dupont Corporation. We contacted the corporate headquarters of both Remington and Dupont shortly after opening the case. Dupont then asked our client to complete a detailed questionnaire about his employment, and to provide Detailed Earnings information from the Social Security Administration. We spent the next seven months trying, through repeated calls and emails, to get a response and to get our client the benefits he was entitled to. We kept getting the same response, that the client’s pension was “being researched”.

Finally, in June, we wrote the Chief Executive Officer and the Senior Vice-President for Human Resources, pointing out that the plan was not complying with its obligations under ERISA to respond to benefit inquiries, and requesting that these executives address the matter urgently. Within two weeks, we received a reply telling us that our client was eligible for a pension, and that he would receive a benefits package within the month.

Our client is now receiving a monthly pension of $256. The expected lifetime value of this pension is nearly $57,000. If it is true that the “squeaky wheel gets the grease”, sometimes we have to be just that squeaky wheel for our clients!

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.

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