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.