A defined benefit plan participant has sued IBM and fiduciaries, alleging that retirees are being shortchanged by the company's use of outdated mortality tables to calculate pension benefit payments.
"Defendants employed actuarial assumptions over 40 years out of date," said the complaint in Knight vs. International Business Machines Corp. et al. "That means plaintiff and class members receive less than the 'actuarial equivalent' of their vested accrued benefit, contrary to ERISA."
Retiree Joshua Knight, who is seeking class-action status for the case, filed suit June 2 in a U.S. District Court in White Plains, N.Y.
The key issue is how to measure differing retirement benefits against the benchmark of a single life annuity, which pays a monthly benefit from the time a participant retires until he or she dies.
For married participants, "the default form of pension payment is a joint and survivor annuity," the lawsuit said. This annuity "provides the participant a payment stream for his own life, and then, if he has a surviving spouse when he dies, for the life of his spouse." Typically, the surviving spouse will receive 50%, 75% or 100% of the benefit the participant had received, the lawsuit said.