August 28, 2012 (PLANSPONSOR.com) - A federal judge has approved calculations for an award to former participants in Alliant Energy Corp.’s cash balance plan.
U.S. District Judge Barbara B. Crabb of the U.S. District Court for the Western District of Wisconsin approved a judgment of $18,677,671.33, calculated by the plaintiffs in the case. Crabb previously ruled that the company ran afoul of the Employee Retirement Income Security Act (ERISA) by using the 30-year Treasury bond rate when calculating lump-sum distributions from 1998 to 2006 for participants who were younger than the plan’s normal retirement age (see “Judge Settles on Alliant Payout Interest Rate”). The interest rates used by Alliant did not result in a whipsaw calculation as required by ERISA prior to passage of the Pension Protection Act of 2006.
Crabb ordered Alliant to use an 8.2% interest rate when it recalculated those payments. However, the company presented a smaller calculation for the judgment than the plaintiffs, which Crabb rejected.
Alliant applied the projection rate to the participants’ account balances under the 1998 plan rather than the balances as adjusted by a 2011 plan amendment. The difference lies in the way the plans award interest credits for the participant’s final year in the plan. The 1998 plan awarded a 4% interest credit; the 2011 amendment awarded the actual interest credit for that year, which exceeded 4% some years, according to the court opinion.
Crabb said the company’s use of the 1998 balances was a misreading of her previous order. The opinion in Ruppert v. Alliant Energy Corp. is here.