Court: Plan Was Correct in Denying Vested Benefits to Unmarried Women's Estate

December 16, 2004 ( -Vested benefits of unmarried pensioners can be legally forfeited under the Employer Retirement Income Security Act (ERISA) if benefits have not yet been paid out at the time of death, a federal district court has ruled.

>US District Judge Colleen McMahon of the US District Court for the Southern District of New York has rejected a participant’s estate’s claims that a plan administer, in denying the payout of vested benefits, violated ERISA.

>The case revolves around Claire Brinker, an employee of Nine West Group for 25 years. When she retired in 1997 at the age of 55, Brinker was fully vested in the company’s pension plan, which provided for a joint and survivor annuity for participants who were married. It allows unmarried participants to receive their benefits in a life annuity or in a lump-sum distribution. Unfortunately, Brinker died before completing the paperwork needed to receive the lump-sum payment.

>Since Brinker passed before receiving any benefits payments, the plan administrator, following the plan’s terms, did make any payments to Brinker’s expressed beneficiaries. Following this, Brinker’s estate filed suit, alleging an ERISA breach in forfeiting the benefits.

>In her ruling in favor of the plan, McMahon stated that ERISA permitted forfeiture because Brinker was unmarried at the time of death, had not reached normal retirement age, and had not started to receive annuity payments, and had not completed the paperwork needed to receive a lump-sum payout.

>McMahon also rejected the estate’s claim that asking for corroborating documentation – in this case a birth certificate or other documentation of identity – was an attempt to deny her benefits, stating that this was logical as a means to formalize actuarial calculations. McMahon also rejected the assertions that Brinker “substantially complied” with the plan requirements by indicating unofficially that she wished to receive a lump-sum payment.