Former employees of U.S. Bancorp, Minneapolis, sued the company and plan fiduciaries, alleging that improper calculations in two defined benefit plans reduced their retirement benefits and violated ERISA.
Each of the three plaintiffs took early retirement on different dates, and each alleged that their benefits were not actuarially equivalent to their respective single life annuity at their normal retirement age. The plans' normal retirement age is 65. ERISA requires actuarial equivalence, said the complaint in the case of Adams et al. vs, U.S. Bancorp et al, filed Feb. 28 in U.S. District Court in Minneapolis.
The plaintiffs are seeking class-action status. The complaint covers certain participants in the U.S. Bank Pension Plan and the U.S. Bank Legacy Pension Plan, whose benefit payments started on March 1, 2016 or later, the document said. Asset sizes for the plans were not indicated in the complaint.
According to the lawsuit, when employees take early retirement, their benefits are calculated using a formula called an early commencement factor, or ECF. "For example, an ECF of .90 means that a participant receives 90% of the SLA (single life annuity) he or she could have received at age 65," the lawsuit said.
The plaintiffs contended that their benefits were depressed because "the ECFs have not changed in 20 years and the actuarial assumptions upon which they were originally based are unreasonable and outdated." Their lawsuit asked the court to require defendants to pay the retirees the amounts they had been allegedly shortchanged and to recalculate the future benefits.
Lee A. Henderson, a U.S. Bancorp spokesman, wrote in an email that the company doesn't comment on pending litigation.
