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 Pension Notes

  PENSION ACTION CENTER

 

  Gerontology Institute

  McCormack Graduate School of Policy and Global Studies

SUMMER 2011
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In this issue
Finding what's lost
Excessive fee case settled for $6.25 million
Fellowship strengthens Center
In the news

Finding what's lost

Throughout New England there are countless retirees who are unable to claim their pension benefits because they cannot find their old company. Companies have many ways of changing:

  • They move to different cities and states;
  • They are bought out by another company and given a new name;
  • They merge with another company;
  • They separate into different companies with new names;
  • They go bankrupt; and
  • They shut down plants and consolidate operations in another location.

Finding these companies and the pension plans they sponsored is where the pension counselors at the New England Pension Assistance Project shine.

 

NEPAP recently helped a client from Rhode Island who had this type of problem.  The plant where he had worked shut down 16 years ago.  Try as he might to find out if he had a pension from his ten years of work as a shop foreman, he failed.  He then remembered an article he'd read in The Providence Journal about the Pension Assistance Project successfully locating a survivor benefit.

 

NEPAP Pension Counselor Maureen Egan searched records at the Rhode Island Secretary of State's Division of Business Services that produced an address in Latrobe, Pennsylvania.

That address was incorrect, but the letter there resulted in a new contact in South Carolina. Eureka!

 

As it turned out the pension we found for this client will provide an annual benefit of $6666.72 - an amount that most likely would have been permanently lost without the help of the skilled pension counselors at the New England Pension Assistance Project.

Excessive fee case settled for $6.25 million

Lois Katziff contacted Pension Action Center Director Ellen Bruce, after being referred to the Center by the Massachusetts Secretary of State's office. Ms. Katziff thought it unfair that her 401(k) plan charged her a fee when the plan changed service providers. She was right!

 

Lois had worked for Beverly Enterprises, Inc. since 1989 and contributed to the most conservative fund offered in the Beverly Enterprises 401(k) plan - The Stable Value Fund. The fund was designed to preserve principal. In the spring of 2006 the Senior Vice President for Human Resources notified employees that Beverly Enterprises was switching its 401(k) service provider from Diversified Investment Advisors to Fidelity Investments.

 

During the summer Beverly Enterprises began the transfer process, which included a guide for plan participants. The guide was the first notice that investors received that The Stable Value Fund would be liquidated and that they would be charged a "Market Value Adjustment." Plan fiduciaries provided no information in the guide about what they did to evaluate whether the alleged benefits of the change to Fidelity could be achieved with Diversified Investors; how the move would result in reduced expenses; or what they had done to minimize the cost to investors of the "Market Value Adjustment."

 

After investigating Lois's initial claim, Ellen Bruce connected Lois to Ron Kravitz of Liner Grode Stein Yankelevitz Sunshine Regenstreif & Taylor LLP, who filed the plan participants' complaint in U. S. District Court in Massachusetts. Lois and her co-workers, who became lead plaintiffs, believed that the fiduciaries responsible for the Beverly Enterprises 401(k) plan did not explore ways to mitigate the losses and thus breached their fiduciary responsibilities.

 

The class action began as a claim for $2.3 million and ultimately settled for $6.25 million. The settlement also required that the fiduciaries for the plan obtain training to ensure that they can fulfill their fiduciary responsibilities.

 

Often employees don't know the fees they are being charged.  To correct this problem, the Department of Labor has issued rules that require service providers to disclose fees to plan sponsors and that plan sponsors provide notices to plan participants of the fees they will be charged.  The first notices to participants will be issued starting May 31, 2012.

 

"Understanding Retirement Plan Fees and Expenses," published by the Department of Labor's Employee Benefits Security Administration, comprehensively discusses plan fees for plan participants

 

Award of fellowship strengthens Pension Action Center

Mia Midenjak, a recent Boston University Law School graduate, has been awarded a fellowship from the Law School to work at the Pension Action Center starting in September 2011 through June 2012. The fellowship will allow Mia to continue helping clients of the New England Pension Assistance Project, where she previously served as a legal intern. Having Mia as a Legal Fellow will enable the Project to represent more clients in this complex field with a high degree of professionalism, to handle more complex cases, and to remain current in the rapidly changing field of pension law and regulation.

 

During law school, Mia worked as a research assistant to Professor Maria Hylton, conducting research on pension benefit plans and wrote legal memoranda on pension plan terminations. She also taught law students how to do legal research on Lexis.

 

Mia graduated from Harvard College in 2007 and is fluent in four languages.

 

Everyone at the Center is delighted to have Mia rejoin the group full-time this fall.

 

In the news

On June 22, 2011, ABC News published an online story, "Do You Have a Pension You Don't Know About," by Lyneka Little. The article features cases from the New England Pension Assistance Project and the Western States Pension Assistance Project that helped two women in difficult circumstances receive the pension benefits they had earned. 
  
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PROJECT WORK ADDS UP

Over 5,600

workers and retirees helped

 

More than

$39.2 million

in benefits recovered

 

Donate Now!

You can help workers and retirees throughout New England enjoy more financially secure retirements by supporting the Pension Action Center. 

 

 Please select

Pension Action Center from the list of centers at UMass Boston and complete the online giving form. Thank you.

 

 

Quick Links

www.pensionaction.org

www.pensionrights.org

www.wiserwomen.org

www.socialsecurity.gov

www.aoa.gov

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