Due to a change in an AT&T pension plan, a former worker became eligible for full pension benefits at age 55—a decade earlier than she had expected. However, she did not learn about the change until she was nearly 65.

What happened. In April 1997, after working for AT&T for about 17 years, “Grace” took paid vacation time and then an unpaid leave of absence to open a home-cooking restaurant. On May 31, 1997, at age 50, she resigned.

As a deferred vested pensioner of an AT&T pension plan, she was entitled to receive benefits when she turned 65. AT&T funds the plan and serves as its plan administrator for purposes of the Employee Retirement Income Security Act of 1974 (ERISA).

In August 1997, AT&T amended the plan. Among other things, the changes allowed certain participants, including Grace, to elect benefits at age 55 without any benefit reduction. Notification about the changes was provided in an April 28, 1997, letter and a January 1, 1998, Summary Plan Description (SPD).

Grace, who was on leave when the letter was mailed, claimed she did not receive the letter or SPD or certain other information the company claimed to have sent her in 2001 and 2009.

She was eligible to begin receiving full pension benefits in October 2001, but she did not know that until 2009 when, approaching her 65th birthday, she contacted AT&T and found out about the plan change. Her request for benefits dating back to her 55th birthday was denied.

Grace sued. The district court ruled in her favor, saying AT&T had improperly denied her retroactive benefits, violated ERISA’s disclosure obligations by failing to inform her about the plan changes, and breached its duty to keep her informed about her plan benefits. The court awarded Grace $121,563.90. AT&T appealed to the U.S. Court of Appeals for the 4th Circuit, which includes Maryland, North Carolina, South Carolina, Virginia, and West Virginia.

What the court said. The appeals court affirmed, noting, among other things, that AT&T did not inquire into the reliability of its mailing process for pension materials. The court said there was conflicting evidence about whether AT&T had sent the 1997 letter to Grace and other individuals on unapproved leaves of absence and whether it had sent the 1998 SPD to deferred vested pensioners, who were not active employees, including Grace. Helton v. AT&T Inc. et al., U.S. Court of Appeals, 4th Cir., No. 11-2153 (3/6/13).

Point to remember: Plan administrators must provide participants with a summary description outlining a material change to plan eligibility requirements within a certain time frame and should document when and where the document is mailed.