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Retirement Planning > Saving for Retirement

High Court Sides With Pension Plan

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The U.S. Supreme Court has blocked efforts by the daughter of a DuPont Company worker to collect benefits from her late father’s pension plan.

The court has issued a unanimous order upholding a ruling by an appellate court and holding that the plan administrators had a right to use a beneficiary designation form submitted by William Kennedy, a plan participant, rather than locating and using a waiver that was part of Kennedy’s divorce proceedings.

The ruling in the case, Kennedy, executrix of the state of Kennedy, deceased, vs. Plan Administrator for DuPont Savings and Investment Plan et al., hinges on the relative weights of various types of documents in deciding where Kennedy’s pension benefits were supposed to go when he died.

“It is no answer, as the estate argues, that William’s beneficiary-designation form should not control because it is not one of the ‘documents and instruments governing the plan under Section 1104(a)(1)(D) of [the Employee Retirement Income Security Act] and was not treated as a plan document by the plan administrator,” Justice David Souter writes in an opinion for the court. “That is beside the point. It is uncontested that the [savings and investment plan] and the summary plan description are ‘documents and instruments govern-ing the plan.’ “

Souter cites a Supreme Court case, Boggs vs. Boggs, that held that ERISA preempted a state law permitting the testamen-tary transfer of a nonparticipant spouse’s community
property interest in undistributed pension plan benefits.”

Souter also cites another Supreme Court case, Egelhoff vs. Egelhoff, and notes that ERISA’s statutory scheme relies on straightforward interpretations of written plan documents.

Kennedy, the Texas resident at the center of the case, divorced and failed to complete all of the steps necessary to act on a divorce settlement agreement in which the ex-wife, Liv Kennedy, agreed to give up any interests in the plans, according to court pleadings.

A state law held that divorce ended a spouse’s right to a stake in the other spouse’s pension benefits.

When the man died, the plans paid all benefits to the ex-wife.

The estate sued, saying it should have received the benefits, because the ex-wife had waived the right to receive the benefits.

A trial court ruled in favor of the estate, but the 5th U.S. Circuit Court of Appeals ruled in favor of the ex-wife.

A copy of the opinion is available here.


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