New York Life Settles Agents Pension Suit
According to a news release, the settlement will allow a larger group of agents who contracted with the company before 1991 to be eligible for a non-qualified pension benefit – also known as “best of both worlds” benefit – when they retire, regardless of whether they have reached a senior employment status. Before the suit, the company paid the benefit to a smaller group of senior agents.
This status is achieved by certain agents who were under contract for 20 or more years before retirement. In addition, the benefit will be payable directly from the Nylic Retirement Plan (New York Life’s pension plan for agents) on a tax-qualified basis, subject to IRS limits, the announcement said. This will enable New York Life to pre-fund the benefit through the tax-qualified trust established under the Nylic Retirement Plan. This will also protect the benefit on a going-forward basis from FICA (i.e., Social Security and Medicare) taxes and other types of charges that have been assessed in the past against the non-qualified benefit.
The settlement also includes $16 million payment by New York Life into a settlement fund. The settlement fund will be used to pay individual awards for up to approximately 3,000 former agents who are determined to be eligible through a claims process supervised by plaintiffs’ counsel. The settlement fund will also be used to pay attorneys’ fees and costs and for the settlement of individual claims that are being dismissed as part of the lawsuit.
Originally filed in February 2001, the lawsuit alleged that the non-qualified benefit should have been treated by New York Life as a benefit covered by the Employee Retirement Income Security Act (ERISA). This would have increased benefit payments received by a large number of agents.
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