Compliance April 12, 2007

Court: Steelworker Misunderstands PBGC Benefit Rules

April 12, 2007 (PLANSPONSOR.com) - Just because the nation's private-sector pension insurer has a ceiling governing the maximum benefit it can pay to participants in plans it takes over doesn't mean that's what a particular worker is entitled to, a judge has ruled.
Reported by

U.S. District Judge Rudy Lozano of the U.S. District Court for the Northern District of Indiana issued the ruling in a suit by plaintiff George Dumas against the Pension Benefit Guaranty Corporation (PBGC) to force the agency to pay him the legal maximum monthly amount of $3,580.

Dumas was receiving $472 per month from LTV Steel Corp.’s pension plan when it was terminated on March 31, 2002 and then taken over by the PBGC. PBGC advised Dumas that he would continue receiving $472 per month.

The plaintiff’s problem was that he just did not understand the PBGC’s operating rules, the court asserted. “The maximum insurance limitation is the maximum amount of a pension benefit that the PBGC may lawfully guarantee. It does not set the amount of benefits any one individual is entitled to earn,” Lozano said.

According to the court, nothing in the information provided by PBGC to Dumas suggested that he was personally eligible to receive the maximum monthly benefit paid by PBGC.

The case is Dumas v. Pension Benefit Guaranty Corporation,N.D. Ind., No. 2:05-cv-100, 4/9/07.

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