University of Kansas School of Law
This short paper reviews the current state of the law governing recoupment actions for defined benefit ERISA plans and focuses in particular on actions against retirees who are without fault for the overpayment. The paper argues that the current practices of many plans which focus on recovering overpayments without taking the consequences to the retiree into account are not required by either ERISA or the IRS. The practices which include ceasing all pension payments, huge cuts in payout amounts and unlimited reach back even in cases where the plan fiduciary has clearly breached its duty to participants, cause tremendous harm to participants who are invariably elderly and often disabled and/or living on a small, fixed income. The authors call for a limited reach back period of no more than three years and for a new requirement that plans obtain insurance in order to provide protection to both participants and plans when overpayment errors are discovered.
Maria O'Brien & Jeanne Medeiros,
Recoupment of Pension Overpayments: Equitable Liens and Meaningful Reform After Montanile
Kansas Journal of Law & Public Policy
Available at: https://scholarship.law.bu.edu/faculty_scholarship/211