Compliance January 22, 2010

Convicted Killer Barred from Getting Dead Wife’s Pension

January 22, 2010 (PLANSPONSOR.com)–A federal judge in New Jersey has ruled that a man convicted for his wife’s death in a murder-for-hire scheme should not be entitled to her pension benefits, despite the plan documents indentifying a participant’s spouse as the designated alternate beneficiary.
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In reaching that conclusion, U.S. District Judge Dickinson R. Debevoise relied on federal common law, which he said would render Manfred Schockner ineligible to get a payout of the benefits his wife Lynn accrued from participating in several retirement plans at Honeywell International. The money should rightfully go to the participant’s estate, the court ruled.

So, even though the Employee Retirement Income Security Act (ERISA) does not explicitly pre-empt so-called “slayer statutes” at the state level, Debevoise contended, federal common law would bar ERISA benefits from being paid to someone convicted of killing the participant who accrued the benefits. The “slayer statutes” typically prohibit those convicted of murder from profiting from their crimes.

“The Court is in agreement with numerous other courts that in enacting ERISA, Congress could not have intended to ensure recovery of ERISA benefits when one spouse intentionally kills the other spouse,” Debevoise declared.

The Honeywell plans provided that in the absence of a named beneficiary, benefits would be paid to the participant’s surviving spouse, and if there was no spouse the benefits would be paid to the participant’s estate. Under the state slayer statutes and federal common law, the court said, Manfred Schockner would be treated as having died before Lynn Schockner who the court said was murdered in November 2004. Her husband was convicted three years later of hiring a hit man to kill her.

As a result of being treated as having died prior to his wife’s death, Debevoise said, the plan would consider that Manfred Schockner was not Lynn Schockner’s surviving spouse at the time of her death. So the dead woman’s estate became her beneficiary.

The ruling came in a case involving a request by the plans for a judge to decide who should receive Lynn Schockner’s benefits since she had not designated a primary beneficiary.

According to the court, Honeywell made the argument that the benefits should be paid in accordance with the plan documents, which would make Manfred Schockner the beneficiary, to avoid jeopardizing the plans’ tax-qualified status.

The case is Honeywell Savings and Ownership Plan v. Jicha, D.N.J. ,No. 08-4265 (DRD).

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