ERISA-Seventh Circuit Rules That Trust Is Not Entitled To Receive Death Benefits From GE Plans

In Ponsetti v. GE Pension Plan, No. 09-2430 (7th Cir. 2010), the plaintiff, which was a trust (the “Trust”), had filed suit, alleging that the defendants had violated ERISA by refusing to disburse cash, representing death benefits, from the GE Pension Plan and the GE Savings and Security Program (the “Plans”) to the Trust. The Trust had been established by a former employee of General Electric, now deceased, to receive death benefits from the Plans. The Plans had paid the death benefits to the employee’s surviving spouse.

In this case, the deceased employee had not properly designated the Trust as his beneficiary. Under the Plans, in the absence of any beneficiary designation, the employee’s surviving spouse receives the death benefits. To designate a nonspouse beneficiary, the Plans required the employee to provide a form that bore the signature of the beneficiary, the signature of the employee’s spouse consenting to such beneficiary, and the signature of a notary or plan representative witnessing the prior two signatures. Here, the employee provided such a form, but the notary later swore in an affidavit that she did not actually witness the two signatures. Thus, the designation of the Trust as beneficiary was invalid.

Was the Trust nevertheless entitled to the death benefits under the Plans, instead of the surviving spouse? The Court said no. The Court went on to find that there was no ERISA violation-such as the failure to provide the Trust a full and fair claims review or other breach of fiduciary duty- that would result in the death benefits becoming payable by the Plans to the Trust.

The lesson, once again-make sure your beneficiary designations are up to date and completed properly.

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