A federal court judge in Minneapolis has rejected a petition by U.S. Bancorp to dismiss an ERISA complaint filed by former employees alleging that the company shortchanged their retirement payments in two defined benefit plans through improper benefits calculations.
"Plaintiffs retired before turning sixty‐five, so their monthly pension benefits needed to be adjusted downward to account for a longer benefits withdrawal period," explained U.S. District Court Judge Nancy E. Brasel, in her Oct. 17 opinion in Adams et al. vs. U.S. Bancorp et al.
"They allege that the discount and mortality rate assumptions used to make that adjustment led to an improper overall reduction of their total benefits as compared to what they would have received had they retired at sixty‐five," she wrote.
"Defendants move to dismiss, arguing that their methodology did not violate" sections of ERISA, the judge added. "The court denies the motion."
The three former employees sued in March 2022, seeking class action status. Each 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 even though ERISA requires actuarial equivalence.
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 initial complaint said. Asset sizes for the plans were not identified in the original complaint.
"Plaintiffs assert that for some plan participants, benefits were reduced roughly forty percent more than they would have been had defendants used the (U.S.) Treasury's discount and mortality rate figures," the judge wrote. "The result, according to plaintiffs, is that they are receiving less in benefits than they are entitled to each month."
Acknowledging that other federal courts have issued differing opinions about terms "actuarial equivalence" and "reasonableness" in calculating early-retirement pension payments, the judge wrote that "for now, accepting plaintiffs' factual allegations as true, they have stated a plausible claim."
