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Early Returns on Actuarial Equivalence Cases

Martin, Craig C ; Amert, Amanda S

Employee Relations Law Journal, 2019-12, Vol.45 (3), p.88-92

New York: Aspen Publishers, Inc

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  • Título:
    Early Returns on Actuarial Equivalence Cases
  • Autor: Martin, Craig C ; Amert, Amanda S
  • Assuntos: Age ; Airlines ; Decision making ; Defined benefit plans ; Defined contribution plans ; District courts ; Employees ; Employers ; ERISA ; Fiduciary responsibility ; Labor law ; Mortality ; Pension plans ; Provisions ; Regulation ; Retirement ; State court decisions
  • É parte de: Employee Relations Law Journal, 2019-12, Vol.45 (3), p.88-92
  • Descrição: Smith v. U.S. Bancorp At issue in Smith, U.S. Bancorp's pension plan provides that participants who elected to commence pension benefits before age 65 had their monthly benefit reduced by an early commencement factor that was set forth in the governing plan documents.2 The plaintiffs allege that those factors "result in benefits that are not actuarially equivalent to the retirement benefit they would have received at age 65," in violation of ERISA.3 "Simply put, Plaintiffs argue that Defendants are paying retirees who retire before the age of 65 an unreasonably low percentage of their annuity benefit based on unreasonable actuarial calculations. "4 Based on these allegations, plaintiffs asserted claims under ERISA to enforce 29 U.S.C. 1054(c)(3), which requires actuarial equivalence, and alleged that the plan's fiduciaries breached their duties by applying the early commencement factors set forth in the plan documents.5 Plaintiffs also argued that the calculation violated ERISA's anti-forfeiture provision.6 In so doing, plaintiffs referenced tax code and Treasury regulation provisions. In their motion to dismiss, defendants argued that no private right of action existed for plaintiffs' claims, that ERISA does not impose a reasonableness standard on the actuarial equivalence calculation, that plaintiffs' breach of fiduciary duty claim was insufficiently pled, and that plaintiffs' claims were time-barred.7 The district court rejected each of these arguments, and held that, although the referenced tax code and Treasury regulations may not provide a private right of action, ERISA does. Torres v. American Airlines, Inc. The Torres plaintiffs' claims are similar to the Smith plaintiffs', with an additional challenge to the interest rates used to calculate joint and survivor annuities under the American Airlines pension plan as outdated.8 In that case, the defendants argued that the plans complied with ERISA's statutory and regulatory provisions, and used a mortality table that was reasonable as a matter of law because Treasury regulations designate it as a standard mortality table.9 It appears that, unlike the Smith defendants, the Torres defendants did not dispute that they were legally required to make a "reasonable" calculation of actuarial equivalence.10 The district court rejected defendants' argument, holding that the Treasury regulation to which they referred applied to analysis of the nondiscrimination requirements of the tax code, rather than to ERISA's actuarial equivalence requirement.11 It therefore concluded that plaintiffs had stated claims for violations of ERISA's actuarial equivalence and anti-forfeiture requirements.
  • Editor: New York: Aspen Publishers, Inc
  • Idioma: Inglês
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  • Realização: ABCD-USP USP   Logos de Redes Sociais: Freepik

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