Two law firms have recently filed a total of nine class action lawsuits arguing that certain pension plans are miscalculating optional forms of benefits and early retirement benefits. The lawsuits allege that plans are relying on outdated mortality tables and interest rates. This means that retirees are not receiving the actuarial equivalent of the default benefit under ERISA, which is the single life annuity at normal retirement age.
Plaintiffs in the cases are asking courts to grant them the difference between the benefits calculated by the plans and what they assert are the benefits that result from calculations using reasonable actuarial assumptions. While these cases are still in the early stages of litigation, plaintiffs’ success in the future could encourage other plaintiffs’ firms to file similar lawsuits. Pension plans should be aware of these lawsuits and may want to analyze their actuarial assumptions and calculations for weaknesses.