Georgia-Pacific Demands $76K in Pension Overpayments from Retiree

February 6, 2008 ( - A former Georgia-Pacific employee has sued the company and its pension plan claiming the plan is now improperly demanding the 73-year-old return $76,220 in overpayments.

Raymond R. Cress, an Evington, Virginia, resident, claims in the suit the plan paid him $658.16 in monthly benefits from March 1996 until February 2007 when Georgia-Pacific notified him that he had never been entitled to that sum. Instead he had actually only been entitled to $80.26 per month from the Georgia-Pacific LLC Salaried Pension Plan, the company said.

Soon after, Cress got a warning that if he did not repay the money to the plan, his future monthly payments would be cut further from $80.26 to $60.20 – the 25% reduction provided by the plan document to allow the plan to recoup overpayments.

“Immediately, Cress went from a financially stable existence to having trouble paying his most basic bills (such as bills for prescription drugs and food),” the suit says. It notes Cress was also separately eligible for monthly benefits of $429.98 from the Champion International Corporation Salaried Retirement Plan.

Cress was told the reason for Georgia-Pacific’s decision that he had been overpaid is that it never offset its monthly payments by the separate amount Cress was also receiving from the Champion plan.

“Not surprisingly, this unilateral reduction of benefits was completely unexpected,” the suit states. “Cress knew nothing about the alleged overpayment and had no reason to believe that anything about his prior payment was improper. To the contrary, as someone who is not sophisticated with regard to benefit issues, retirement or pension plans, or, of course (the Employee Retirement Income Security Act) ERISA, Cress had reasonably and fully relied upon Georgia-Pacific with respect to its benefit calculations.”

By not finding out until 2007 about the alleged overpayments, Cress complains in the suit, he and his wife are unable to resume their work lives long enough so they can make up the income shortfall.

Georgia-Pacific is being charged with breaches of its ERISA fiduciary responsibilities for its actions over the mistaken benefit amount and its subsequent efforts to recoup the alleged overpayments. The suit demands a judge order Georgia Pacific to continue the payments and not try to recoup the alleged overpayments or at least allow Cress to revise his pension elections to reflect they were made at age 65 instead of 62 “so as to put Cress back in the place he would have been, such that he can undo the decisions he made in reliance on Georgia-Pacific’s misrepresentations.”

The case has been assigned to U.S. District Judge Norman K. Moon of the U.S. District Court for the Western District of Virginia. The lawsuit is here .