A federal court has ruled that an employer did not breach its fiduciary duties by decreasing a retiree's monthly pension check to recover overpayments made to him due to a miscalculation of his benefit amount.

In fact, the U.S. District Court for the Eastern District of Tennessee found, citing a 6th U.S. Circuit Court of Appeals case, that "[ERISA] clearly assumes that trustees will act to ensure that a plan receives all funds to which it is entitled, so that those funds can be used on behalf of participants and beneficiaries.” The court also said fiduciary duties under ERISA also include those imposed under the common law of trusts, and under the law of trusts, a fiduciary is required "to perform the duties imposed, or exercise the powers conferred, by the trust documents."

According to the court opinion, the Bethel Jacobs Company plan document provides the company with the responsibility to "correct errors." U.S. District Judge Thomas W. Phillips said that issuing nearly $125,000 in overpayments to Clarence W. Sheward was a serious error that Bethel Jacobs was required to correct, and that failure to correct the error and recover the overpayments would have been a violation of Belthel Jacobs fiduciary duty to act on behalf of the trust and in the interests of the remaining participants and beneficiaries.

In addition, the court agreed with Bethel Jacobs that the employee who calculated Sheward’s pension amount and communicated it to him was not acting as a fiduciary of the plan, but was performing a ministerial function, and it said the mere fact that an error occurred in the calculation of Sheward’s benefits is not, in itself, a sufficient basis to support a claim for breach of fiduciary duty.

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