Judge Rejects AT&T ERISA Suit Over Early Retirement Benefits

U.S. Magistrate Judge Sallie Kim called the plaintiffs’ claims ‘both internally inconsistent and illogical.’

A U.S. District Court judge in Northern California has dismissed a lawsuit accusing AT&T of miscalculating pension benefits for early retirees.

U.S. Magistrate Judge Sallie Kim granted AT&T’s motion to dismiss the Employee Retirement Income Security Act (ERISA) class action suit, calling the plaintiffs’ arguments “both internally inconsistent and illogical.”

Originally filed a year ago, on October 1, 2019, the suit claimed that AT&T improperly reduced early retirement benefits and joint and survivor annuity (JSA) benefits by applying an “Early Retirement Factor.” According to the complaint, the plaintiffs and proposed class members said they were forced to forfeit accrued, vested pension benefits if they retired before age 65 and/or received their pension benefit in the form of a joint and survivor annuity.

Plaintiffs claimed this loss resulted in them receiving less than the actuarial equivalent of their vested accrued benefit as required by ERISA, and was under benefit calculations for the “normal retirement age” of age 65 at AT&T. Those who retired at their normal retirement age receive a monthly pension payment through a single life annuity (SLA).

The complaint stated that if ERISA requires a plan to allow participants to retire early with a reduced monthly pension, the value of a participant’s reduced monthly pension must be actuarially equivalent to the participant’s monthly pension benefit starting at age 65. Therefore, plaintiffs claimed AT&T violated ERISA rules while accusing the plan’s Early Retirement Factor and Joint and Survivor Annuity Factor of being outdated, claiming that they did not “reflect the general longevity of the American public or reasonable actuarial assumptions.”

Defendants filed a motion to dismiss, arguing that the plaintiffs lacked standing to sue because they did not “demonstrate injury based on the application of the Early Retirement or Joint and Survivor Annuity Factors.” They also argued their benefit calculations were based on “actuarially appropriate methods for ERISA purposes.”

In her decision, Kim wrote that plaintiffs have not and did not demonstrate injury under ERISA, and that the “Early Retirement Factor” applied to calculate benefits is formulated under Section 417(e) of ERISA.