A retired participant in a Raytheon Co. defined benefit plan sued the company and plan executives, claiming that his post-retirement benefits have been shortchanged because the company used an out-of-date mortality table to calculate benefits.
"Using an older mortality table to calculate a conversion factor decreases the present value of the qualified annuities and — interest rates being equal — the monthly payment that retirees who elect these qualified annuities," said the complaint filed June 27 in a U.S. District Court in Boston, claiming that Raytheon violated the Employee Retirement Income Security Act.
"Defendants use unreasonable and improper actuarial assumptions to calculate the qualified annuities, resulting in 'conversion factors' that do not generate actuarially equivalent benefits," said the complaint in the case of Johnny Cruz vs. Raytheon Co. et al. The complaint said Raytheon used a 1971 mortality table to calculate annuities for pension plan participants.
Mr. Cruz, whose complaint seeks class-action status, retired in 2015 at age 55, is a participant in the $1.2 billion Raytheon Co. Pension Plan for Hourly Employees, Waltham, Mass.
The plan is one of the defendants in the lawsuit. Four other Raytheon pension plans also are named as defendants.
Using the 1971 mortality table caused Mr. Cruz and other retirees "to unknowingly lose part of their vested benefits and forfeit those benefits in violation of ERISA's anti-forfeiture rule," the lawsuit said.
Officials at Raytheon didn't respond to a request for comment.
