Pension Benefits Administration Committee 1818 Representative’s Report

At 2005 Annual Meeting of the 1818 Society

During the past year, there were no major developments on the administrative side of the Staff Retirement Plan (SRP) and the matters coming before the Pension Benefits Administration Committee (PBAC) generally related to provisions that had been part of the Plan for many years. There were two PBAC changes that are of interest to members of the 1818 Society. Xavier Coll, the new Vice President, Human Resources, has replaced Katherine Sierra as Chair of the Committee and Alexander Keyserlingk is now the alternate PBAC representative (who is nominated by the 1818 Society and appointed by the President of the Bank) replacing Jean-Pierre Jacqmotte who has moved to the West Coast.

As I have pointed out before, the PBAC has overall responsibility for the administration of benefits under the Plan and decides questions of interpretation of Plan provisions relating to participation, retirement, elections and benefits when requested to do so. Therefore, most of the Committee’s work revolves around individual claims.

Four cases considered by the Committee related to requests to receive a Bank pension in foreign currency. Each case was different but the question in all four was whether the evidence submitted by the retired staff member justified the necessary determination of establishment or maintenance of a “principal residence” as required under the terms of the Pension Plan. The Plan does not define the term, but the Bank has well–established procedures and requirements; these cases, however, had special aspects which warranted their being submitted to the Committee.

Three of the four claims are of some general interest. They were submitted by Bank retirees who had been working for international organizations for a number of years, had open-ended appointments and were not nationals of the countries where they were working. Because of their status, the individuals did not hold permanent residence visas and could not obtain proof of residence from the local government authorities, evidence that is generally submitted by retirees seeking foreign currency pension payments. The Committee discussed whether the retiree would need to present evidence that he or she intended to remain in the country when the international employment terminated, including evidence that the retiree’s legal status in that country was not dependent on continuing employment with the international organization. The Committee decided that the retirees had met the requirement of maintaining their “principal residence” in the country even though they could not show that this was their permanent residence. In light of the three cases, the Committee requested that new guidelines be developed to address the situation of currency election by Bank retirees working for international organizations.

Another case that presented the Committee with novel and difficult questions which the Committee was unable to resolve because of lack of sufficient information involved the payment of an optional survivor annuity to an individual who was alleged to be unable to handle her own financial affairs but who did not have a legal guardian. The Committee requested additional documentation to be considered at a future meeting which would enable it to make a decision which protected the interests of the beneficiary and was consistent with the Plan’s provisions.

Finally, I want to refer to a case which I mentioned last year in which the PBAC decided to honor a lump sum beneficiary designation to a former second wife. This decision was consistent with the Plan provision which directs that the lump sum payment be made to the designated beneficiary when a retiree dies without a surviving spouse. The retiree’s estate appealed to the Bank’s Administrative Tribunal. In a comprehensive opinion in May of this year, the Tribunal affirmed the decision of the PBAC, finding that the conclusions of the PBAC were well within its discretion. The Tribunal concluded that the relevant provisions of the Plan and its underlying policies and justifications were reasonable and that their application in this case did not constitute an abuse of discretion.

The Tribunal added that it was “conceivable that, on certain facts, it would indeed be an abuse of discretion to disregard post-designation events that might bear upon the equity of a strict application” of the Pension plan provisions. The Tribunal stated that “the burden of proving so would lie with the person attacking the written beneficiary designation, both because of the person’s knowledge of and access to such unusual facts and because of the strong presumption of regularity accorded such a designation.” This is Decision No. 330 of the Tribunal (Dominique Rodriguez-Sawyer v. IBRD). All the decisions of the Tribunal are public and can be found on the Web. The lesson of the case for all of us is that it is important to review beneficiary designations whenever there are life changing events and to make our wishes and intentions absolutely clear in order to avoid the possibility of challenges and litigation.

Eva L. Meigher

October 11, 2005