MISREPRSENTATION OF AGE

[LIBERTYKID]

A participant misrepresents his age at time of hire. At time of retirement we find that he is 65 and not age 58. He gets greater benefits at there is no subsidy for early retirement . I'd like to give the person the lesser benefit but believe that I must follow the terms of the plan. The plan does not have an "error correction" section in it. Anyone want to chime in on what the plan can/should do?

[Effen]

Pay the person whatever they are entitled to based on their actual age/service and let all the rest be water over the dam.

Since they misrepresented their age, the sponsor actually contributed less for them than they should have, so it saved them money. There really aren't any damages since his benefit would be the same if he was truthful about his age when he was hired.

[SoCalActuary]

You also have common law issues of employment. The person gave false documents during employment, such as drivers license, passport, employment application, etc.

Now, the burden of proof is on the lying employee to explain why they lied before and are now telling the truth.

The health insurer was also given false census information for rate keeping.

That is why many employers used the approach that the benefit provided is based on the original documentation.

[LIBERTYKID]

[That is why many employers used the approach that the benefit provided is based on the original documentation.

But the question is whether a defined benefit plan, which must be administered in accordance with its terms, can pay benefits only on the origional documentation. I would like for that to be the correct answer but I am not sure it is the correct result.

[david rigby]

Since you now have more information, it does not seem appropriate to ignore it.

[SoCalActuary]

This is a glowing endorsement for cash balance plan design.

No retroactive adjustments benefiting liars.....

[K2retire]

If, at the time of hire, the employee provided proof of identity that included a date of birth, what documentation has now been provided to verify the older age? What responsibility do the plan fiduciaries have to determine which documents are fraudulent and which are accurate?

[MoJo]

I think there is no doubt but that you must abide by the terms of the plan and use his actual age for purposes of calculating the benefit. I know of no exception to that. What you are really asking is whether or not there is any recourse against him for his subterfuge. Well. If he hasn't yet retired, fire him. Not sure if that gets you anything, but 1) it'll feel better to you; 2) any benefits dependent on not being fired (for cause), if any, would no longer be available.

[jpod]

Who is to say that the employee provided false documents to show date of birth at hire? Evidently he lied, but most likely the DB plan was nowhere on his radar screen. I've seen this type of after-the-fact discovery several times because age discrimination was common, and still is. It is quite likely that this individual's real age was a whole lot closer to 50 or older when hired, rather than 40 or younger, and he may have had legitimate fears.