D.C. residents who have corporate pensions should take note of a recent spate of lawsuits against companies who have allegedly breached their fiduciary duties by underpaying joint and survivor annuity benefits (JSA). Recently, there was a lawsuit filed against UPS which was the latest suit to claim that a company effectively shortchanged those who elected to take their pensions as a joint and survivor annuity as opposed to a single life annuity (SLA).
Retirees have the option to take their pension as a JSA so that their beneficiaries can continue to receive their pension after they die. A JSA is a lower amount than an SLA. Companies cannot simply choose any percentage that they want for a JSA. Instead, it must be the actuarial equivalent of an SLA.
An actuarial equivalent factors in the rate of mortality in order to reach the calculation. However, here the UPS plaintiffs have alleged that the company was using a mortality table from 1980, and life expectancy in the U.S. has improved considerably since then. As a result of the old table, JSA pensioners are underpaid since there is a greater discount applied due to a higher than necessary mortality calculation. In addition, the company is also accused of using outdated interest rate calculations that further depress pension payments.
Those who are concerned that they may be getting less than they are legally entitled to from their pensions can consult with a benefits claims litigation lawyer. ERISA imposes certain obligations on the fiduciary that they cannot violate. If they do break this obligation, they can be liable in a civil lawsuit. An ERISA benefits lawyer may review pension payments in order to help determine if the company is doing the right thing when it comes to calculating payments. ERISA is a complicated area, and a lawyer might be able to help decipher it.