Compliance July 16, 2010

Honeywell Cleared in Early Retirement Suit

July 16, 2010 (PLANSPONSOR.com) – A federal judge in Maryland has rebuffed claims by a Honeywell International pension participant that she was entitled to early retirement even though it had been promised her in a mistaken benefit statement and separation agreement.
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U.S. District Judge Roger W. Titus of the U.S. District Court for the District of Maryland said Honeywell did not act improperly in rejecting plaintiff Mariela Valderrama’s claim for early retirement eligibility. Valderrama simply didn’t quality under Honeywell’s 80-point early retirement program because she hadn’t accumulated the necessary points under the arrangement, Titus ruled.

After being laid off from Honeywell in 2002 and given severance payments, Titus said Valderrama was still more than 50 months from her 80-point early retirement date, and that her age plus years of service totaled only 71.6411 points.

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Further, Titus ruled, the employer had reasonably concluded that Valderrama did not qualify for a bridge-leave period to take her to early retirement because she was more than 50 months from qualifying for the benefit. Titus explained that the plan document said an employee was eligible for bridge leave if he or she was within 36 months of qualifying.

Finally, Titus put aside Valderrama’s argument that she was promised the early retirement benefits in a separation agreement and in a benefit estimate. Valderrama had not relied on the erroneous documents to her harm so they can’t be the basis for a claim under the Employee Retirement Income Security Act (ERISA), the court held.

The case is Valderrama v. Honeywell TSI Aerospace Services, D. Md., No. RWT 09cv2114.

Compliance July 15, 2010

Congress, Labor Close Ranks on Fee Disclosure

July 15, 2010 (PLANSPONSOR.com) – Despite rumblings about potential tension between regulators and legislators on fee disclosure rules, there was a visible attempt to close ranks today.

 

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In announcing the new interim final rule (seeDoL Issues New Rules on Fee Disclosure), Secretary of Labor Hilda Solis credited the “considerable work on the part of House of Representatives and Senate legislators to improve the current disclosure system.” 

In fact, she went on to say that “the steps we are announcing today would not have been possible without the leadership and vision of House Education and Labor Committee Chairman George Miller and Senate Health, Education, Labor and Pensions Committee Chairman Tom Harkin.  By highlighting the negative consequences that undisclosed fees can have for workers’ retirement security, they made possible the type of dialogue between policymakers and the regulated community that has allowed for the development of meaningful regulatory standards on such a complex issue.”

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For his part, Congressman George Miller (D-California), chairman of the House Education and Labor Committee and author of 401(k) fee disclosure legislation (see Miller 401(k) Fee Disclosure-Advice Bill Heads for House Floor), said “I am pleased that the Department of Labor has taken this important step to ensure that employers have information on the fees and conflicts of interest contained in the 401(k) plans they sponsor”.  He also said that he “will continue to support the department’s efforts on fee disclosure through regulation and continue to fight for my legislation that would codify these consumer protections into law for all 401(k)-style plans.”

Miller has long championed legislation calling for greater 401(k) fee disclosure – legislation that was incorporated in The American Jobs and Closing Tax Loopholes Act passed by the House, before those provisions were stripped in the final Senate version (see Fee Disclosure Rides Along with Pension Relief, Fee Disclosure Not in Senate Tax Extenders Bill).  

Senator Tom Harkin (D-Iowa), Chairman of the Senate Health, Education, Labor and Pensions (HELP) Committee, who has also championed 401(k) fee disclosure legislation (see DC Plan Fee Disclosure Bill Introduced in U.S. Senate), said “I commend the Department of Labor for its efforts to shed light on excessive 401(k) fees.  As more and more people rely on their 401(k) plans for retirement, it is crucial that workers have all the information they need to make sound investment decisions.  Employees should be told everything about what they pay in fees upfront and in clear terms.”  He also said “I look forward to working with the Department on efforts to further improve transparency and help workers make wise choices about their retirement plans.”

 

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