A class-action lawsuit filed in U.S. District Court in Detroit claims Royal & Sun Alliance and the pension plan of its former U.S. affiliate, Royal Maccabees Life Insurance, violated federal pension law when the plan’s fiduciaries sweetened pension benefits for themselves at the time of the company’s sale to Swiss Re in 1999. The damages being sought are around $5 million.
In the suit, filed June 11 but just made public, plan participant Joseph G. Gromola alleges he and about 300 other employees received enhanced pension benefits that equaled a week’s salary under changes made before the sale. However, the suit claims, the plan’s eight fiduciaries received amounts equal to between three and six months’ salary or more. Also, the interest rate used for computing the lump sums for Mr. Gromola and other plaintiffs was higher than what is permitted by the plan and under federal pension law, causing the participants’ lump sums to be even smaller in proportion to the pensions the fiduciaries collected, the lawsuit claims.
Mark Bush, at Fraser Trebilcock Davis & Dunlap, the attorney for Royal Maccabees, did not return phone calls seeking comment.
Royal Maccabees Life Insurance’s pension plan has $30 million in assets, according to the Money Market Directory.
