A former employee of Ecolab Inc. has sued the company, its pension plan and plan fiduciaries accusing them of violating ERISA by improperly calculating benefits for certain retirees.
The lawsuit, filed Feb. 21 in a U.S. District Court in St. Paul, Minn., said the pension plan executives used out-of-date mortality tables to calculate benefits, thus underpaying retirees. The case of Scott Bennett vs. Ecolab Inc. et al. seeks class-action status.
The dispute involves joint and survivor annuity (JSA), which is a pension that pays a retiree and spouse for as long as they live. The JSA payment is based on a calculation related to a single life annuity, the standard pension for a single participant, covering mortality tables and interest rates.
Bennett said the JSA shortchanges married retirees because pension executives use mortality tables that are over 50 years old in preparing the payment formula.
ERISA requires the JSA to be "actuarially equivalent" to the single-life annuity, but Spencer alleges that the Ecolab formula prevents equivalence.
Because Ecolab used a mortality table from 1971, the plan underpaid Bennett and other retirees because life expectancy has grown since then, said the lawsuit, adding that Ecolab should have used updated mortality tables. The lawsuit noted that Ecolab uses updated mortality data for other purposes, such as the 2020 data for ERISA's requirement for calculating minimum funding of pension benefits.
"Ecolab disagrees with the allegations set forth in the complaint, and we look forward to vigorously defending our position in court," a company spokesman wrote in an email.
As of Dec. 31, 2022, the Ecolab Pension Plan, St. Paul, had assets of $1.72 billion, according to the latest Form 5500.
