UPS used outdated mortality data to tally monthly retirement benefits, alleges class action lawsuit


A proposed class action lawsuit alleges that UPS unlawfully failed to pay Joint and Survivor Annuity (JSA) benefits under its pension and retirement plans in amounts that meet federal actuarial equivalency requirements, resulting in lost to thousands of retirees a portion of their earned monthly benefits.

The 46-page complaint alleges that the United Parcel Service of America, its Pension Plan Administrative Committee, and the UPS Pension Plan Board of Directors violated the federal Employees Retirement Income Security Act (ERISA). , in part by using “decades” of mortality data to calculate the monthly payouts of pension and pension plan participants.

The plaintiffs, eight UPS retirees, seek to represent more than 46,000 pension plans and more than 21,000 pension plan participants who began receiving JSA benefits after Jan. 1, 2013.

Under UPS’s pension and retirement plans, participants earn retirement benefits in the form of a single life annuity (SLA), a monthly payment for the rest of their retirement lives, the lawsuit says. . According to the lawsuit, the plans also offer UPS retirees the option of receiving monthly benefits in forms other than an SLA, including a number of JSAs. A JSA – joint and survivor annuity – is a lifetime annuity of a participant with a conditional annuity for life of the beneficiary of the person, usually a spouse, relaying the case.

“Thus, a 50% JSA is a JSA that pays the spouse half of the amount that was paid to the member before his death; a 75% JSA pays the spouse three quarters.

The monthly benefits payable as JSA, whatever the percentage, as the case may be, will be less than the amount payable as SLA. This is because the JSA must consider the likelihood that the plan will have to pay benefits for a longer period if a participant predeceases their spouse, the suit says. Under federal law, however, the amount that JSA benefits can be reduced is limited, and JSA benefits that pay between 50% and 100% of the amount paid while the participant and spouse live together must be at least the actuarial equivalent of the SLA option. According to the suit, two benefit options are considered actuarially equivalent when they have the same present value, as long as the present values ​​of the two benefits are calculated using the same reasonable actuarial assumptions.

Calculating the present value of a JSA or SLA, i.e. the total amount of future benefits that the participant and beneficiary are expected to receive, involves entering an interest rate and actuarial assumptions regarding mortality, the complaint continues. The suit notes that death rates have generally improved in recent decades. Using old mortality tables to calculate a conversion factor for JSA and SLA values ​​decreases the present value of a JSA and, interest rates being equal, the monthly payment a retiree would receive, indicates the court case. Along the same lines, using lower interest rates to calculate actuarial equivalence can also reduce the amount of an individual’s monthly retirement payments, the case adds.

The lawsuit alleges that UPS depressed the present value of JSA benefits, relative to SLA benefits, for retirees using mortality data from the 1960s through the 1980s, resulting in “significantly lower” monthly payments than if the company was using reasonable benefits, up to -date actuarial assumptions.

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