Compliance September 26, 2005

Benefit Form Governs Despite Intent of Participant

September 26, 2005 (PLANSPONSOR.com) - The US 6th Circuit Court of Appeals reversed a lower court's ruling and decided that a deceased participant's husband was due her employer-provided life insurance proceeds though it was clear she intended to change her beneficiary designation.
Reported by

According to the court opinion, the lower court had made its ruling based on recorded phone conversations between Patricia Hardy-Craig and her employer’s benefits plan administrator which obviously showed that Hardy-Craig wished to change her beneficiary designation from her husband to her three daughters.  

The appellate court ruled that the plan was governed by ERISA which says that the plan is to be administered according to the “documents and instruments governing the plan.”   Therefore, since the beneficiary designation form on file at the time of Hardy-Craig’s death named her husband as beneficiary, he was entitled to the insurance proceeds.

Never miss a story — sign up for PLANSPONSOR newsletters to keep up on the latest retirement plan benefits news.

In January 1999, when the policy became effective, Hardy-Craig designated her three daughters as beneficiaries.   In May 1999, when she married, she sent a beneficiary designation form to the plan administrator changing her beneficiary to her husband.   This was the form on file at the time of her death in 2000.

The phone conversations clearly showed that Hardy-Craig did not want her husband to be beneficiary and wanted to name her three daughters, but the change process was delayed due to Hardy-Craig not knowing her PIN and then not timely receiving the forms.   The administrator did not receive a signed change form from her before her death.

The full text of the opinion is  here .  

Investing September 23, 2005

Feds Adopt New Jobless Counting Procedures for Storm Areas

September 23, 2005 (PLANSPONSOR.com) - The Department of Labor (DoL) primary data crunchers have put into place special procedures to count the nation's workforce, to cope with the effects of Hurricanes Katrina and Rita.
Reported by

Officials at the Bureau of Labor Statistics (BLS) said the new procedures will be used when processing the September nonfarm-payrolls report scheduled to be released on October 7, according to a MarketWatch report. The regions most affected by the storm accounted for 1.9% of national employment, 1.7% of business establishments and 1.5% of wages, according to the BLS.

For the payroll survey, the BLS will try to contact the businesses in its sample. If no response is received, the BLS will assume that the location is closed and that payrolls for the month are zero. About one-third of jobs in the region are typically reported from a central business location elsewhere in the country.

Never miss a story — sign up for PLANSPONSOR newsletters to keep up on the latest retirement plan benefits news.

In the separate survey of households, the BLS will not make changes to its procedures. If a household cannot be contacted, it will be removed from the sample, giving households outside the region greater weight in the final data.

The problem is that much of New Orleans was under a mandatory evacuation order during the second week in September when the government typically surveys both business locations and households.

Officials admit that the special procedures could result in the payroll survey overstating the job losses, while the separate household survey could understate the losses. “This carries some risk of overstating employment loss,” the BLS said  in a statement Friday. The nonfarm-payroll, average-earnings and hours-worked data come from the business-establishment survey.

Many companies have said they’ve kept employees on payrolls despite the storm. State and local government workers also would remain on payrolls, in most cases. But for many small businesses, jobs have been lost, perhaps permanently.

So, employment losses from the storm could be understated in the household survey. The unemployment-rate and other demographic-employment data come from the household survey

To be counted as employed in the household survey, a person must have worked for pay for at least one hour during the week of September 12, or have been absent from their job for reasons ranging from sick leave to weather-related causes.

«