A participant in a Sprint Communications LLC defined benefit plan sued the company and plan fiduciaries alleging the plan used out-of-date mortality tables and improper interest rates to calculate retirement benefits.
The complaint, filed Nov. 11, focuses on Sprint's alleged "failure to pay joint and survivor annuity benefits under the Sprint Retirement Pension Plan in amounts that satisfy the actuarial equivalence requirements in the Employee Retirement Income Security Act."
The equivalence is based on a single life annuity, said the lawsuit filed in a U.S. District Court in Kansas City, Kan., in Kevin McFadden vs. Sprint Communications LLC et al. Mr. McFadden is seeking class-action status.
Due to the disparity between the single life annuity and the joint and survivor annuity, "defendants have and will continue to cause retirees to lose part of their vested retirement benefits in violation of ERISA," the lawsuit said.
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.
"All pension-eligible employees were paid appropriately, and the plan intends to vigorously defend itself," a T-Mobile representative wrote in an email.
The Sprint pension plan was closed to new participants on Aug. 11, 2005, and benefit accruals have been frozen since Dec. 31, 2005, the lawsuit said.
Mr. McFadden began receiving his plan benefits as a 100% joint and survivor annuity, with his spouse as the beneficiary, in 2017.
He argued in his lawsuit that Sprint was using a mortality table published in 1976, which is "based on data from the 1960s that does not incorporate improvements in life expectancy that have occurred since that time."
By contrast, the lawsuit said, Sprint used updated mortality table data in its filings with the Securities and Exchange Commission, referencing tables prepared by the Society of Actuaries, to explain benefits liabilities in financial statements.
"Because these two analyses — determining plan liabilities and determining plan benefits actually paid to participants — measure the payment of the same benefit streams over the length of the same lives, they should be determined using the same actuarial assumptions," the lawsuit said.