Remand to plan required to determine participant’s access to SPD containing designation information

A pension plan administration committee must reconsider its decision that, because the wrong designation form was used, a deceased participant’s putative beneficiary is not entitled to the participant’s vested benefit, the U.S. Court of Appeals in Cincinnati (CA-6) has ruled. On remand, the plan’s administrative committee must consider whether an SPD, which specifies the correct form to be used, was actually furnished to the participant.

Incorrect form

At the time of her death, a retiree owned a fully vested benefit in her former employer’s Savings and Stock Investment Plan (SSIP), a pension benefit plan governed by ERISA. Under the terms of the plan, if the employer’s plan administration committee received no beneficiary designation for the SSIP, then upon a participant’s death, any benefit would go to the beneficiary named by the participant in the employer-provided life insurance policy.

Upon receipt of notice of the participant’s death, the committee distributed the SSIP benefit to the participant’s two nieces, who were the named beneficiaries for the participant’s life insurance policy. It rejected a form that designated a third person as the SSIP beneficiary, because the designation was made on an incorrect form. The district court upheld the plan committee’s decision and the putative SSIP beneficiary appealed.

Incomplete record

The appellate court agreed that the SPD clearly stated the correct form to use to make a beneficiary designation for the SSIP.

However, the claimant argued for the first time on appeal that nothing in the record suggested that the participant was actually furnished the SPD as contemplated under ERISA §104. If the participant never received the SPD, she could not have been expected to know which form to use.

The appellate court rejected the notion that the claimant should have raised this issue before the plan committee. While an ERISA claimant must exhaust her remedies before commencing suit in federal court, she is not required to raise every potential issue at the administrative level.

Since the issue of whether the participant ever received an SPD was not raised at the administrative level, the court remanded the case to the district court, with instructions to remand to the plan committee.

Source: Liss v. Fidelity Employer Services Company, LLC (CA-6).

Source: General Explanations of the Administration’s Fiscal Year 2014 Revenue Proposals, Department of the Treasury, April 2013. EBRI press release, April 10, 2013. ASPPA press release, April 5, 2013. ERIC press release, April 10, 2013. PSCA press release, April 10, 2013.

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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