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5500 Preparer's Manual for 2012 Plan Years
The premier resource in the field of Form 5500 preparation, 5500 Preparer's Manual will help you handle the required annual Form 5500 filings for both pension benefits and welfare benefit plans.
The trustees of a defined benefit plan did not breach their ERISA fiduciary duty when they decreased a retiree’s monthly benefit because the plan had made mistakes when it first calculated the benefit amount, the U.S. Court of Appeals in Philadelphia (CA-3) has ruled in Bocchino v. Trustees of District Council Ironworkers Funds of Northern New Jersey.
Plan’s calculation errors
A 69-year-old participant planned to retire, expecting to receive a monthly benefit of approximately $2,800 per month. Then, two days before his retirement began, he learned instead that his benefit would be approximately $4,000 per month.
The plan soon determined that, due to its own failure to interpret correctly plan provisions on delayed retirement, it was overpaying the participant. His correct monthly benefit should have been about $3,200 (more than he’d expected but less than he was receiving). Accordingly, the plan reduced the retiree’s monthly benefit and demanded that he return the overpayment (about $4,000).
The retiree filed suit, alleging breach of fiduciary duty and asking for reinstatement of the higher benefit amount. The district court ruled for the plan and the retiree appealed.
No detrimental reliance
On appeal, the circuit court conceded the trustees committed a material omission by failing to include information about the delayed retirement benefit in its summary plan description. However, the retiree failed to show he had relied to his detriment on the SPD. He decided to retire in the belief that he would receive a smaller pension than what he actually received, even after the plan corrected the overpayment error. In one victory for the retiree, he was not required to return the amount already overpaid to the plan.
For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.
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