JPMorgan Chase Retirement Plan “Wear Away” of Benefits Class Action

How would you feel if you discovered that for the last fifteen of your thirty-plus years with a company, you had not accrued any retirement benefits? This class action brings suit against the JPMorgan Chase US Benefits Executive, the Board of Directors of JPMorgan Chase Bank, JP Morgan Chase & Company, and the JPMorgan Chase Retirement Plan, concerning “wear away” of benefits in the plan.

The class for this action is all former Morgan Plan participants who received pension benefit statements during wear away that did not disclose their frozen final average pay benefits and did not disclose they would not receive the benefits that they were reported to have accrued in addition to the frozen accrued benefits.

The plaintiff in this case, Joseph Pessin, worked for JPMorgan Chase for thirty-one years, but the complaint alleges his benefits in the retirement account “were effectively frozen as of December 31, 2003…”

The original retirement plan, called the Morgan Plan, was a defined benefit plan that originally used a final average pay benefit formula to determine a monthly benefit, the complaint alleges. As of December 31, 1998, the plan became a cash balance plan, although the complaint says that those who had been in the original Morgan plan continued to earn benefits under the old final average pay formula through December 31, 2003.

According to the complaint, the Employee Retirement Income Savings Plan (ERISA) and the Internal Revenue Code do not allow a plan amendment to reduce participants’ accrued benefits, so Morgan could only reduce future benefits.

The complaint claims that the company decided that Pessin and other former Morgan Plan participants would be subject to wear away: that is, they would not accrue any benefit under the new Morgan Cash Balance Plan until that benefit became larger their accrued benefit under the old plan.

When JPMorgan and Chase merged on December 31, 2000, the JPMC was created. Beginning in 2002, the JPMC Plan Administrator began providing annual statements of pension benefits to Pessin and other participants in the Plan. The complaint alleges, “The statements showed the hypothetical account balance growing annually with the addition of pay credits and interest credits.”

Pessin and the other participants were thus not aware that their benefits had been frozen. The complaint alleges that “the JPMC Plan Administrator provided them with pension statements every year that falsely told them that their pension benefits were increasing…”

The complaint claims that the statements did not disclose the frozen final average pay benefit, did not tell participants that if this frozen amount exceeded their cash benefit, they would receive the frozen amount only, and did not tell them that they might thus not be getting the “pay credits” or “interest credits” they saw on the statement.

The complaint alleges that the JPMC Administrator breached his fiduciary duty to the Plan participants and violated ERISA rules requiring him to give participants statements of their accrued benefit.

Article Type: Lawsuit
Topic: Employment
Tags: ERISA, False or Misleading Information, Incomplete payments of benefits, Omitting or Withholding Information, Payment of Promised Benefits or Subsidies, Retirement Plans