Case Study Employee Benefit

When Retired Participants Benefit More Than They Should

A company's defined benefit pension plan allowed participants or their surviving beneficiaries to receive their pensions in the form of a life annuity, with 60 months of guaranteed payments. Once the total 60 monthly payments were made, they were supposed to cease.

When we were hired, we examined the plan's benefit payments as part of our initial audit. We discovered that the plan's third party administrator did not have adequate internal control procedures in place to identify and terminate annuity payments after 60 months, and therefore was continuing to pay participants monthly. In some cases, these erroneous payments had continued for a number of years, resulting in overpayments totaling more than $100,000.

Based on our findings and advice, the plan's trustees took the appropriate legal steps and were able to recover the entire amount of the overpayments.

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