Supreme Court Affirms Primacy of ERISA Plan Documents
In a unanimous decision, the U.S. Supreme Court that an ERISA plan’s specific procedure for designating beneficiaries controls over other instruments that may conflict with it. In the case, Kennedy v. Plan Administrator for the DuPont Savings & Investment Plan, an employee designated his wife as the beneficiary for his pension plan and his savings plan. They later divorced. The employee then executed a new beneficiary form for his pension plan naming his daughter as beneficiary, but did not do the same for his savings plan. When the employee died, the plan’s administrator strictly followed its procedures under the Plan and deemed the employee’s ex-wife to be the beneficiary of the savings plan.
This case is significant because it helps to resolve a surprisingly frequent dilemma that confronts plan administrators when they encounter a deceased plan participant who failed to remove a former spouse as beneficiary. In these cases, the beneficiary’s apparent intent often appears to be in conflict with the designation reflected in the plan documents. The lesson of the case, ultimately, is that where a plan contains a specific procedure for revoking or otherwise changing a beneficiary designation, a plan participant should be careful to follow those procedures, as plan administrators are bound to follow the procedures of the plan. This is true even if, as in this case, the designated beneficiary had waived those benefits in a divorce decree.
More on the case can be found at this link: