Plaintiff Robert French in his complaint accuses the BP Plan of unlawfully reducing the accrued benefits that participants had already earned in two ways:
- BP eliminated accrued benefits that certain participants had previously earned in their prior plans by establishing their Opening Accounts retroactively.
- BP also applied unlawful and unreasonable interest rate assumptions to the calculation of participants’ Opening Accounts.
The complaint pointed out that under the BP Plan, and as required by the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code, the Opening Accounts were supposed be at least equal to the lump sum present value of accrued benefits earned as of the date the Opening Accounts were established. “Accordingly, the interest rate rules under ERISA Â§ 205(g)(3)(A)(i), 29 U.S.C. Â§ 1055(g)(3)(A)(i), and under the Internal Revenue Code Â§ 417(e), governed the BP Plan’s determination of the lump sum present value of benefits. However, the BP Plan repeatedly determined the lump sum present value of benefits by applying interest rates that exceeded the statutory maximum rates under ERISA and the Internal Revenue Code,” the filing said.
French alleged that in establishing the Opening Accounts as of January 1, 1989, the BP Plan used an interest rate of 8% to determine the present value of the benefits that had accrued under the BP Plan, any predecessor plans of the BP Plan, and any Merged Plans when the applicable rate by law as of January 1, 1989, was 7.75%.
In addition, the complaint notes that Opening Accounts for employees of BP’s Air BP division were established as of January 1, 1989, though they did not actually join the plan until January 1, 1991 – unlawfully causing these employees to forfeit accruals they had earned under the prior plan between January 1, 1989, and January 1, 1991. Similar charges were included regarding other divisions.
French’s claim asks the court to certify both an Excessive Interest Rate class and a Retroactive Opening Account class.
Among other things the suit asks the court to:
- Declare the BP Plan's retroactive establishment of Opening Accounts violates ERISA Â§Â§ 203(a) and 204(g); 29 U.S.C. Â§ 1053(a) and 1054(g);
- Enjoin defendants from enforcing unlawful provisions of the BP Plan;
- Order the defendants to amend the BP Plan to cure the ERISA violations;
- Order the defendants to calculate accrued benefits by including the accrued benefits earned in their prior plans that were forfeited as a result of the BP Plan's retroactive establishment of the Opening Accounts;
- Order defendants to calculate accrued benefits by refraining from applying interest rates that exceed the maximum interest rates permitted under ERISA Â§ 205(g), 29 U.S.C. Â§ 1055(g)(3)(A)(i), and Internal Revenue Code Â§ 417(e) to the calculation of Opening Accounts; and
- Order defendants to pay to any Class members who have begun to receive their benefits the difference between what they have been paid and what they should have been paid under the BP Plan as cured for the ERISA violations.
The complaint is here .
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