Sprint Communications will pay $3.5 million to settle an ERISA lawsuit by former employees who accused the company of shortchanging their retirement benefits by using out-of-date mortality tables and improper interest rates to calculate the benefits.
The settlement notice was filed Nov. 29 in a U.S. District Court in Kansas City, Kan., by attorneys representing the plaintiffs, noting that the document was unopposed by the defendants.
One plaintiff sued in November 2022, and two other plaintiffs joined in an amended complaint in January in McFadden et al. vs. Sprint Communications LLC et al. The class-action settlement requires court approval.
Plaintiffs said Sprint and its fiduciaries violated ERISA because their calculations of joint and survivor annuity, or JSA, benefits and pre-retirement survivor annuity, or PSA, benefits were actuarially equivalent to a single life annuity.
The latter is the standard for individual participants. The JSA provides benefits for the life of a participant and beneficiary. The PSA provides survivor benefits to a retiree's beneficiary.
The parties negotiated a settlement through mediation and reached an agreement in principle in September.
The settlement document said JSA participants affected by the agreement will receive increased monthly benefits, as will the beneficiaries of the PSA subject to final court approval. The settlement document said 1,009 people are affected.
The Sprint pension plan was closed to new participants Aug. 11, 2005, and benefit accruals have been frozen since Dec. 31, 2005, according to the original lawsuit.
Sprint is a limited liability company based in Overland Park, Kan., and is a wholly owned subsidiary of T-Mobile US Inc. The parent company isn't a defendant.