Kaiser, Vanguard Refuse to Fix Woman’s Pension Plan, She Says
SAN FRANCISCO (CN) - A woman is suing Kaiser Foundation Health Plan and The Vanguard Group Inc. because they switched out her retirement plan without her consent, she says in San Francisco Superior Court.
Lolita Morada, 80, worked for Kaiser for 32 years before retiring in 1994. She filled out paperwork that deferred payment of her retirement benefits until 2002, but in 2011 it was discovered the paper work was invalid, according to the complaint.
“It was found to be invalid because, according to the defendant … the participants of the plan were offered distributions only in the form of installments and they were not offered, as required by law, the optional forms of benefit available under the plan, including the normal form of benefit-annuity payments,” according to the complaint.
Vanguard claims it sent a letter to Morada, notifying her of the situation and offering her the opportunity to choose between a single lump sum, installments or annuity payments, benefit options that should have been offered in 1994.
The letter also allegedly stated that if she did not want the default of the annuity option, she needed to send in another Required Minimum Distribution Form with her benefit choice selected.
Finally, the letter stated that if the form was not received, the plans default option would then be purchased from an insurance company, and her account balance would no longer be with Vanguard, the administrator of the plan.
Morada says she did not receive the letter because she was living “abroad” between July 18, 2011 and March 24, 2012.
Vanguard sent her additional notices and deadline extensions within that period, but Morada says she did not receive them because she was out of the country.
As a result, Vanguard purchased the default Qualified Joint and Survivor Annuity from MetLife, using plaintiff’s account balance, which stood at over $245,000.
Morada later contacted Vanguard to tell them she was out of town, did not have a chance to review her options and had no idea her retirement plan had been switched. She asked to have the plan reversed because the Qualified Joint and Survivor Annuity was inappropriate, considering her husband had died in 2010.
Vanguard switched her to a single life annuity, but Morada discovered the plan would not pay the remaining balance to her chosen beneficiaries, her son and daughter, after her death.
Both Vanguard and Kaiser denied her repeated requests for the plan reversal.
Morada said Vanguard could have used other means to contact her and that they should not have modified her plan without her consent.
“Defendants … had access to other means of communicating with plaintiff such as electronic mail or email and had done so in past communications with plaintiff, but they failed to utilize such means of effecting communications with plaintiff,” according to the complaint.
Morada is suing for breach of fiduciary duty and violations of the federal Employee Retirement Income Security Act. She wants a court to declare the defendants’s plan modifications null and void, order the defendants to restore the original plan and its beneficiaries, and pay $100 per day since the refusal, as statutory penalties.
Rodel Rodis, in San Francisco, represents the plaintiff.