By Robert Steyer
Source: Pensions & Investments
Eight former employees in two defined benefit plans run by United Parcel Service of America Inc. have sued the company and plan fiduciaries alleging they were shortchanged in their retirement benefits because the plans used out-of-date mortality tables to calculate the benefits.
They allege that retirees who took joint and survivor annuity benefits instead of a single life annuity didn’t receive the actuarial equivalent of the SLA, the most common annuity for retirees — a violation of ERISA.
There are two parts to a retirement benefit calculation — the mortality table and interest rate which, when combined, create a conversion factor that plans apply when participants choose a JSA, the complaint said. “By failing to pay JSA benefits in amounts that are actuarially equivalent to the single life annuities offered to participants, defendants are causing retirees to lose part of their vested retirement benefits in violation of ERISA,” according to the lawsuit, which was filed April 27 in a U.S. District Court in Atlanta.