Private Annuities

[Guest Ellen Levy]

When a company terminates a plan and purchases private annuities for plan participants, who is responsible if a benefit was miscalculated? The company did the original calculation (25 years ago) and the participant's pension has been in pay status since that time. He only recently learned a mistake may have been made.

Thanks!

[Mike Preston]

It would depend on the contractual arrangement between the plan and the private insurer. It is possible, although unlikely, that the insurer agreed to provide the benefits due under the plan. It is more likely that the insurer agreed to provide the amounts identified to it by the plan as owing to the participants.

In either event, proving it is wrong at this point may be a challenge.

[JRG]

I have a similar situation....a DB plan terminated 15-20 years ago and annuities were purchased for the particiapnts, however, one participant was not listed on the benefits lists so no annuity was ever bought for him. The Plan is long gone, though the former plan sponsor and the TPA still exist....who is responsible for paying the participants benefit?

[mbozek]

I have a similar situation....a DB plan terminated 15-20 years ago and annuities were purchased for the particiapnts, however, one participant was not listed on the benefits lists so no annuity was ever bought for him. The Plan is long gone, though the former plan sponsor and the TPA still exist....who is responsible for paying the participants benefit?

Isnt the Q what is the statute of limitations under the state law in which the participant lives or the plan is administered which is closest to the claim that the employee can make for the benefits. E.g., If the closest claim under state law is a 6 year s/l for breach of contract then the participant has 6 years from the breach to file a claim for benefits.

[K2retire]

Does the breach occur when the annuity is not purchased (and how do you determine the date that something didn't happen?) or when the claim for benefits is denied?

[mbozek]

Does the breach occur when the annuity is not purchased (and how do you determine the date that something didn't happen?) or when the claim for benefits is denied?

The s/l could begin on the date the plan failed to provide an annuity benefit to the participant in accordance with its terms, i.e. termination of the plan.