Sprint Communications, LLC sponsors a retirement plan for its employees that offers a single life annuity (SLA) or joint and survivor annuity (JSA). This class action brings suit against Sprint, its Employee Benefits Committee, and the committee’s individual members, alleging that the JSA benefits are not actuarially equivalent to the SLA benefits, as required by the Employee Retirement Income Security Act (ERISA).
The class for this action is all participants and beneficiaries of the plan who began receiving a 50%, 75%, or 100% JSA or a QPSA on or after November 11, 2016, whose benefits had a present value that was less than the present value of the SLA they were offered using the applicable Treasury Assumption as of each participant’s benefit commencement date.
An SLA provides a payment after retirement for the life of the participant. A JSA is similar, but after the death of the participant, some proportion of the payment continues for the life of the participant’s beneficiary (usually the participant’s spouse). The Sprint plan offers 33, 50, 75, and 100 percent JSAs.
The monthly benefit paid for a JSA will be less than the monthly benefit for an SLA, because the benefit is calculated with the knowledge that the JSA may have to pay out for a longer period if the beneficiary lives longer than the participant. JSAs that pay between 50% and 100% of the benefit to the survivor are Qualified Joint and Survivor Annuities (QJSAs) which, the complaint says, “must be at least the actuarial equivalent of the participant’s SLA.”
According to the complaint, “[t]wo benefit options are actuarially equivalent when they have the same present value, calculated using the same, reasonable actuarial assumptions.”
Calculating the present value involves the use of actuarial assumptions about both mortality and interest rates. People have been living longer in recent years, the complaint says, so using older mortality tables decreases the present value of a JSA and therefore the monthly payment determined. Similarly, using lower interest rates also decreases the present value of JSAs. The two considerations together create a conversion factor used to calculate JSA benefits.
The complaint alleges that Sprint uses the UP 1984 mortality table to calculate JSA benefits, which it claims “overstates mortality rates because it is based on data that is 50 years old.”
According to the complaint, then, Sprint is using “flawed formulas” to calculate JSA benefits that “depress the present value of JSAs, resulting in monthly payments that are materially lower than they would be” if the conversion factors were calculated with up-to-date assumptions. This causes the plaintiff in this case and the class members “to receive less than they should in pension benefits each month, which will continue to affect them throughout their retirements.
Article Type: LawsuitTopic: Employment
Most Recent Case Event
Sprint Calculation of JSA Annuity Benefits Complaint
November 11, 2022
Sprint Communications, LLC sponsors a retirement plan for its employees that offers a single life annuity (SLA) or joint and survivor annuity (JSA). This class action brings suit against Sprint, its Employee Benefits Committee, and the committee’s individual members, alleging that the JSA benefits are not actuarially equivalent to the SLA benefits, as required by the Employee Retirement Income Security Act (ERISA).
Sprint Calculation of JSA Annuity Benefits ComplaintCase Event History
Sprint Calculation of JSA Annuity Benefits Complaint
November 11, 2022
Sprint Communications, LLC sponsors a retirement plan for its employees that offers a single life annuity (SLA) or joint and survivor annuity (JSA). This class action brings suit against Sprint, its Employee Benefits Committee, and the committee’s individual members, alleging that the JSA benefits are not actuarially equivalent to the SLA benefits, as required by the Employee Retirement Income Security Act (ERISA).
Sprint Calculation of JSA Annuity Benefits Complaint