Compliance November 28, 2012

Employer Not Guaranteed Refund of Overpaid Contributions

November 28, 2012 (PLANSPONSOR.com) – An employer is not guaranteed a refund of overpayments mistakenly made to a multiemployer plan. 
Reported by

The 8th U.S. Circuit Court of Appeals found that the Greater St. Louis Construction Laborers Welfare Fund was not wrong to deny a refund of overpayments to Park-Mark Inc. because the fund determined that doing so would hurt the pension plan participants. One of the funds’ administrators presented evidence that all of Park-Mark’s collective bargaining agreement (CBA) contributions, including overpayments, benefitted Park-Mark’s employees through health insurance coverage and pension contributions. Additionally, he stated that if the overpayments were returned, the funds would be required to deduct pension credits from Park-Mark’s employees that were based on the overpayments.  

The appellate court also ruled that a refund is not an equitable defense because Park-Mark delayed in bringing a claim for restitution. The court rejected Park-Mark’s argument that, although it began making overpayments in 2004, it did not learn of the overpayments until an accountant discovered them in 2010. “This factor still weighs in favor of the funds, however, because the CBA outlines when payments should be made by unambiguously defining the scope of the CBA’s jurisdiction. Park-Mark’s delay in bringing the claim was inexcusable, and has prejudiced the funds who are placed in the position of attempting to unwind six years of payments by trying to calculate whether Park-Mark’s employees truly received benefits from the payments,” the court said.

The multiemployer plan filed the lawsuit against Park-Mark in order to collect contributions the employer did not make after it learned of the overpayments. Park-Mark argued it was not liable for the missed payments since they offset the overpayments.   

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The 8th Circuit affirmed a district court’s decision that that the Employee Retirement Income Security Act (ERISA) allows for refunds of overpayments to a multiple employer welfare arrangement, but under Section 403, an employer alleging an overpayment of contributions may not unilaterally offset future contributions by the alleged overpayments of past contributions (see “MEWA Participating Employer Cannot Offset Contribution Overpayments”).  

The district court also dismissed Park-Mark’s reimbursement claim, and on appeal, the employer argued that claim should not have been dismissed. However, the appellate court noted that at the time of the district court decision, Park-Mark neither requested a continuance, nor sought to have the discovery deadline extended. The discovery deadline had passed when the district court granted summary judgment in favor of the funds.  

The 8th Circuit’s opinion is here.
Administration November 28, 2012

Drought Increases True Love’s Christmas Cost

November 28, 2012 (PLANSPONSOR.com) – An improving economy coupled with a severe drought that caused increased feed costs for large birds generated a 4.8% surge in the 2012 PNC Christmas Price Index.
Reported by

Based on the gifts in the holiday classic, “The Twelve Days of Christmas,” the price tag for the PNC CPI is $25,431.18 in 2012, $1,168 more than last year, according to the whimsical economic analysis by PNC Wealth Management. This year, the PNC CPI’s increase outpaced the government’s Consumer Price Index, which stands at 2.2% the past 12 months through September. 

12DaysofChristmas 

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As part of its annual tradition, PNC Wealth Management also tabulates the “True Cost of Christmas,” which is the total cost of items gifted by a True Love who repeats all of the song’s verses. This holiday season is the most expensive year ever: Every thoughtful True Loves must fork over $107,300.24 for all 364 gifts, an even more generous jump of 6.1% increase compared with last year.  

Much like the government’s CPI, the PNC CPI also measures a Core Index—up a modest 2.6% this year—that excludes the Swans, which tend to be the most volatile in the index. The drought caused the cost of Swans to rise by 11.1%, while the cost for Geese increased 29.6%. 

Six items—the Partridge, Two Turtle Doves, Four Calling Birds, Eight Maids-A-Milking, Nine Ladies Dancing and 10 Lords-A-Leaping—remained the same price as last year.PNC explained that as the only unskilled laborers in the PNC CPI, the price for the Eight Maids-a-Milking is represented by the minimum wage.With the minimum wage flat at $7.25 per hour, hiring the maids this year will not increase labor costs.    

The prices for 11 Pipers Piping ($2,562.00) and 12 Drummers Drumming ($2,775.50) are both up 5.5% this year.Economists report that housing prices may have bottomed and this trend is reflected in the PNC CPI as the home to the Partridge jumped 11.8% to $189.99. The Three French Hens were up 10% and the Five Gold Rings, which soared 16.3%, played catch up with the dramatic rise in gold prices in 2011.    

For those True Loves who prefer the convenience of shopping online, PNC Wealth Management calculates the cost of “The Twelve Days of Christmas” gifts purchased on the Internet. This year, the trends identified in the traditional index are repeated in the Internet version. The cost of the items is $40,440 if bought online—a 1.5% increase from last year and nearly $580 more than this year’s traditional index.  

PNC’s updated cost of Christmas website is at www.pncchristmaspriceindex.com. The site includes an interactive scavenger hunt where users take a trip around the world to locate the 12 gifts of Christmas.  

A table for the Index is here.

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