Participants in AT&T Inc.'s defined benefit plan sued the company and the plan, saying AT&T's calculations for early retirement benefits violated rules under the Employee Retirement Income Security Act.
The participants "have been denied their full ERISA-protected pension benefits," said the complaint filed Oct. 1 in a U.S. District Court in Oakland, Calif., seeking class-action status.
"Plaintiffs and class members are forced to forfeit accrued, vested pension benefits if they retire before age 65 and/or receive their pension benefit in the form of a joint and survivor annuity," they argued in the case of Eliason et al. vs. AT&T Inc. et al.
The participants' complaint alleged that AT&T's calculations for offering early retirement benefits and joint and survivor annuity benefits "result in plan participants receiving less than the actuarial equivalent of their vested accrued benefit as required by ERISA."
The calculations for these benefits fall below the calculations for a "normal retirement age," which is age 65 for the AT&T Pension Benefit Plan, the participants wrote. For an employee leaving at the normal retirement age, the benefit is a monthly payment via a single life annuity.
The complaint said AT&T has violated ERISA rules because the plan's early retirement payments aren't actuarially equivalent to the payments for normal retirement payments. It alleges that the formula for calculating early retirement benefits and the joint and survivor annuity "have not been updated in over a decade, despite dramatic increases in longevity amongst the American public."
The company disagreed. "We're recognized for offering highly competitive wages and benefits," AT&T spokeswoman Megan Ketterer said in an email. "We're proud to provide defined benefit pension plans for most employees, and 401(k) savings plans with generous matches, and our pension plans comply with ERISA."
Assets for the AT&T defined benefit plan were $51.7 billion as of Dec. 31, 2018 according to the company latest 10-K statement.