No luck getting Pension Payments from an Estate

[Guest gerry326]

Is there a point at which you can "give up" trying to retrieve overpaid pension benefits from an estate?

We have four pension plans in a Master Trust. 3 participants from two of the plans died in 2004, but we were not notified until after an additional benefit was paid (example - we paid on the 1st of April, but the retiree died March 29th; he/she wasn't eligible to receive the 4/1 payment). We send our entire retiree database for a death records search twice a year, and 2 of the notifications came from there.

We have made several attempts to get the money back from the estates, but with no luck. Plan 1 is owed $3,000 (total Plan assets = $83.6M) and Plan 2 is owed $2,000 (total Plan assets = 19.5M).

Since our company just hired a corporate attorney, we are going to have him send a letter, but are not anticipating a response. In the total scheme of things, the amounts seem so small that it's not worth doing anything, but do we have to?

HELP!

[SoCalActuary]

The fiduciaries have a duty to evaluate the cost of recovery against the excessive benefit. If collection costs are a significant percentage of the expected recovery, is it worth it? But you still ought to try, at least in a perfunctory manner, to get the overpayments back, including a threat to file in small claims court.

[david rigby]

I agree. It may also be that there is a fiduciary duty to try to collect, no matter what your real-world expectation. Even if you think the chance is zilch for various reasons, you should send the letter because the next time it happens will have different circumstances.

[QDROphile]

Fiduciaries are required to be reasonable. That does not mean throwing good money after bad, but it means that the costs and benefits have to be weighed intelligently.

[mbozek]

The plan is an unsecured creditor whose only recourse is to file a claim as a creditor against the decedent's estate (assuming that the s/l has not expired.)

The probate court will review the claim and decide whether the debt should be paid. To file a claim you have to know which county the will is filed for probate which will require that you retain local counsel and will cost as much as the claim. If no will is filed there can be no recovery.

PS: In most states only individuals can sue in small claims ct.

[Guest gerry326]

Once we've gone the route of having an attorney send a letter and receive no response, does the company need to fund the "lost" amount back to the Plan?

[ljr]

Assuming these are defined benefit plans, the Company is funding the benefits anyway.