Overestimate of Pension Benefit Not a Fiduciary Breach

August 3, 2012 (PLANSPONSOR.com) – A recent Employee Retirement Security Act (ERISA) court case demonstrates the importance of disclaimers in retirement plan communications.

The U.S. District Court for the Southern District of Ohio found Virginia Stark’s breach of fiduciary duty claim failed because Mars Inc.’s pension plan administrator, Hewitt Associates, and its call-in center employees were not acting as fiduciaries when they provided  erroneous pension estimates to Stark. They did not exercise any discretionary authority or discretionary control respecting management of the plan, disposition of its assets, or its administration.   

The court also found that Mars and the pension committee did not breach their fiduciary duty to Stark by relying on the information provided by Hewitt and that any reliance by Stark on the erroneous estimates would have been unreasonable in light of the disclaimers.  

In his opinion, U.S. District Judge James L. Graham said at most, the evidence shows that the Mars employees named in the case “made an honest mistake” based on their good-faith reliance upon the information provided by Hewitt, and that they were at most “guilty of misfeasance, not the malfeasance that estoppel requires.

According to the opinion, a booklet given to Stark in 2004 stated that it was intended to provide general information about the plans, that the estimates of plan benefits might not reflect actual plan benefits, and that “if there is any inconsistency between this statement and the plan documents, the terms of the plan documents will control.”  In addition, Hewitt’s Your Benefits Resources web page included a disclaimer that “Hewitt Associates does not give any warranty or other assurance as to the content of the material appearing on the site, its accuracy, completeness, timelessness or fitness for any particular purpose.”  

The written estimate statement provided to Stark prior to her election to receive benefits also stated “Mars, Incorporated reserves the right to correct any errors. Specifically, if the estimate conflicts with the benefit defined by the [plan], the [plan] will prevail.”  

Graham wrote: “[I]n light of the disclaimers, plaintiff could not have reasonably believed that Mars or the committee intended for her to rely on the pension estimates as being error-free.”  

The opinion in Stark v. Mars, Inc. is here.