The lawsuit was filed in Philadelphia federal court on behalf of PNC current and former employees affected by the move, according to a press release from the law firms filing the suit.
The seven count complaint accuses PNC of illegally converting its defined benefits pension plan into a cash balance plan in 1999, a move that resulted in pension benefits reductions as employees age, according to the press release.
The suit also includes charge that:
- the new plan does not include early retirement benefits available as was the case with PNCs old plan.
- when determining lump sums, the company did not project account balances at age 65 and then provide for an actuarial equivalent for benefits received at an earlier age.
- the company failed to tell employees that the alteration would result in fewer benefits being distributed.
- PNC violated its fiduciary duties in regards to the plan.
The switch from defined benefit plans to cash balance one has been controversial, with many accusations being leveled stating that older workers are defrauded out of their rightful benefits (See One Bad Apple ). Other companies that have made the switch include IBM, AT&T, Xerox, and CIGNA. Most recently, CitiGroup was sued over a similar move (See Citigroup Sued Over Cash Balance Plan ).