Your HR department probably receives occasional employee questions about pension benefits. Be careful how you answer them—if you answer them at all.
Employees often rely on benefits information to make major life decisions—e.g., setting a retirement date or turning down a job offer—so it’s wise to let your field the questions rather handling them internally.
Here’s why: Something as simple as making a mistake while calculating the employee’s years of service can lead to a lawsuit years later over retirement benefits brought under the Employee Retirement Income Security Act (ERISA). Leave those calculations to the experts who manage your retirement programs to avoid any inadvertent mistakes.
Recent case: Melvyn Pell worked for DuPont after transferring from a job with a company that subsequently merged with DuPont. Over the years, he asked for clarification about crediting his prior years’ service for DuPont’s retirement plan.
Several DuPont employees assured him that his time with the merged entity would count toward his pension. In fact, that time did not. The HR employees were wrong and had confused pension credits for those used to calculate vacation leave, sick time and other benefits.
Pell sued, requesting a larger pension. The 3rd Circuit Court of Appeals concluded that the estimates Pell got were material misrepresentations that he relied on to his detriment. The court said DuPont must “pay him a higher pension benefit going forward,” based in part on “DuPont’s repeated misrepresentations to Pell over an extended course of dealing.” (Pell v. DuPont, No. 05-5006, 3rd Cir., 2008)
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