The Pension Benefit Guaranty Corp. is expected to pay about $100 million to 40,000 retirees whose pension plans did not adopt changed vesting requirements in the late 1970s.
From 1976 through 1981, about 11,000 underfunded pension plans terminated without changing their vesting standards to comply with new rules in the 1974 Employee Retirement Income Security Act.
While many people - under their plans' rules - were not vested in their benefits, they did meet ERISA's minimum vesting requirements. In general, companies had longer vesting periods prior to ERISA; while the pension law required faster vesting periods, it did give companies time to adopt the new standard.
Under the settlement, which is still pending before the U.S. District Court for the District of Columbia, the PBGC will pay workers with 10 or more years of service about 80% of the benefits they did not receive. Participants with between five and nine years service will get somewhat less.
The settlement stems from the 1988 nationwide class-action suit Page/Collins vs. PBGC.
