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Kaleida Health Pension Plan Conversion Benefit Losses ERISA Class Action

This class action, brought under the Employee Retirement Income Security Act (ERISA), concerns a conversion of pension benefit plans. The complaint alleges that the defendants—Kaleida Health, Kaleida Health Pension Growth Plan, Kaleida Health Retirement Plan Committee, and Kaleida Health’s Board of Directors—did not properly calculate the account conversions, so that some employees lost significant amounts of retirement benefits they had already earned.

The class for this action is all persons, and their beneficiaries and estates, who became participants with an opening account balance of greater than zero in the Cash Balance Provisions of the Plan on or after July 1, 1999, and who were either paid a benefit from the plan after July 1, 1999 or who are still entitled to a benefit from the plan.

Originally, the employees of the entities that merged to become Kaleida Health participated in one of four traditional pension plans. This changed after the mergers in or around June 1999.

Participants in these “Legacy Plans” who were union members, the complaint says, “continued to have their pension benefits determined under the terms of their respective Legacy Plan,” since the defendants were not able to simply unilaterally change terms achieved by collective bargaining. Those who were not represented by unions—including the plaintiffs in this case—were subject to Cash Balance Provisions that effected a conversion of their retirement plan benefits and calculated an opening balance for their new accounts.

At the time of the conversion, the complaint claims, the employees were told that “you will not lose any benefit you have already earned under a current pension or savings plan.”

However, the complaint alleges that when Kaleida figured these opening balances, as of June 30, 1999, it “undervalued the ‘actuarial present value’ of the participants’ accrued benefit” in their Legacy Account, by a number of means.

However, the complaint alleges that this resulted in “cash balance account opening balances [that] were in amounts significantly lower than the amounts required to pay the participants the benefits that each had already accrued under the Legacy Plans at their normal retirement age—so that in a very real sense, the participants started their participation under the Cash Balance Provisions of the Plan in a hole.” The complaint alleges they then had to earn back benefits they had already accrued.

As an example, the complaint cites the situation of one of the plaintiffs, Robin Chilton. According to the complaint, a statement under her original plan said that as of December 31, 1995, she had accrued a benefit of $503.09 per month, projected to rise to over $1,700 a month by retirement age. With her subsequent raises, the complaint calculates that her retirement benefit should have risen to more than $3,000 per month by now.

But the complaint alleges that the conversion under the Cash Balance Provisions of the Plan “reduced her anticipated future benefit accruals from approximately $3,000/month to approximately $0-$100/month.”

Article Type: Lawsuit
Topic: Employment

Most Recent Case Event

Kaleida Health Pension Plan Conversion Benefit Losses ERISA Complaint

January 7, 2022

This class action, brought under the Employee Retirement Income Security Act (ERISA), concerns a conversion of pension benefit plans. The complaint alleges that the defendants—Kaleida Health, Kaleida Health Pension Growth Plan, Kaleida Health Retirement Plan Committee, and Kaleida Health’s Board of Directors—did not properly calculate the account conversions, so that some employees lost significant amounts of retirement benefits they had already earned.

Kaleida Health Pension Plan Conversion Benefit Losses ERISA Complaint

Case Event History

Kaleida Health Pension Plan Conversion Benefit Losses ERISA Complaint

January 7, 2022

This class action, brought under the Employee Retirement Income Security Act (ERISA), concerns a conversion of pension benefit plans. The complaint alleges that the defendants—Kaleida Health, Kaleida Health Pension Growth Plan, Kaleida Health Retirement Plan Committee, and Kaleida Health’s Board of Directors—did not properly calculate the account conversions, so that some employees lost significant amounts of retirement benefits they had already earned.

Kaleida Health Pension Plan Conversion Benefit Losses ERISA Complaint
Tags: ERISA Violations, Retirement Plan Changes, Retirement Plans