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socrateaser
socrateaser, Lawyer
Category: California Employment Law
Satisfied Customers: 32960
Experience:  Retired (mostly)
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I signed paperwork to to initiate my pension early and returned

Resolved Question:

I signed paperwork to to initiate my pension early and returned it to the plan administrator. I received a response that the paperwork was based on incorrect calculations. These calculations were consistent with two prior estimates sent by the plan to me which I used to evaluate payout options. The new calculations will reduce the amount payable. Is the plan required to accept their actions (in error) and pay the amounts indicated or do they have the right to issue/pay revised amounts?
Submitted: 6 months ago.
Category: California Employment Law
Expert:  socrateaser replied 6 months ago.
Hello,

Under federal ERISA law, plan administrators have great authority to control retirement distributions. However, the administrator cannot alter the stated provisions of the written retirement plan, because it is a contract between employee participants and the plan.

WHat you are describing is an actuarial problem. There is an absolutely definite and certain answer as to who is right and who is wrong, unless the plan provisions contain an ambiguity.

If your calcuations are correct, then you can sue the plan administrator for breach of trust and force the plan to pay the correct amount, plus any lost interest or benefits, and/or attorney's fees and costs of suit. If there is a good faith dispute, then you could sue to obtain a declaration of your rights from the court. However, the court could require that both you and the administrator would have to bear your own respective legal expenses, which could make the lawsuit a net loser, dependent upon the difference in your retirement benefits.

Consequently, the only certain way for you to avoid risk in this situation is to hire an actuary to review the plan provisions and calculate your benefits. Once you are certain you're correct (or that there is a good faith dispute), then you would have a reason to make a settlement demand, followed by a lawsuit. But, without that actuarial as an expert to face off against the plan administrator's actuaries and accountants, the administrator will probably just ignore you and continue to do what he/she believes is correct -- because there will be no threat of legal action.

In the end, the threat of serious legal action is the only thing that will get the plan adminstrator attention. So, that's how you will have to proceed.

Pleae let me know if my answer is helpful or if I can provide further clarification or assistance.

And, thanks for using justanswer.com!
Customer: replied 6 months ago.

The nature of the error in the calculation is not an actuarial matter. My pension takes into consideration an amount funded by another (related) party. The plan administrator calculated the remaining portion owed using an incorrect amount assumed to be paid by the other party - thereby inflating the monies owed to me. Therefore they issued new paperwork to correct the error. The amount to be paid is now reduced. Again, they provided the estimates twice then issued the original pension paperwork consistent with the estimates - i.e. the apparently miscalculated this 3x.

Expert:  socrateaser replied 6 months ago.
If the adminstrator made a mistake which operated to your benefit, then you cannot force the administrator to maintain the error, unless you can prove that you relied to your detriment on the mistake. Example:

Suppose the administrator told you that you would receive $2,000 per month. So, you go out and you purchase a home with a $2,000 per month mortgage. Then, the administrator comes back and says, "Sorry, it should have been $1,000 per month." You have relied to your detriment on the adminstrator's first calculation, and you will be injured if the adminstrator is permitted to change your payment. This is a lawsuit you could win.

But, without proof of detrimental reliance, the administrator can change the payment amount, and a court would uphold the change.

I hope I'm understanding your facts, now. If not, then feel free to clarify, and I'll try again.

Thanks!
socrateaser, Lawyer
Satisfied Customers: 32960
Experience: Retired (mostly)
socrateaser and 4 other California Employment Law Specialists are ready to help you

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