PBGC Will Pay U.S. Airways Pilots for Delayed Pension Payments

The agency agreed to a $5.25 million class action settlement.

A U.S. District Court has given final approval to a settlement between the Pension Benefit Guaranty Corporation (PBGC) and a class of retired U.S. Airways pilots who claimed their pension benefits were unreasonably delayed.

The case originally filed in 2007, noted that U.S. Airways pilots who chose to receive their retirement benefits as a monthly annuity began to receive retirement payments the first day of the month after they retired (the Benefit Commencement Date). However, pilots who chose the lump-sum payment were typically not paid until 45 days after the Benefit Commencement Date and were not paid interest for that period.

The PBGC agreed to a $5.25 million class action settlement to remedy the pilots’ claims. The agency assumed responsibility for the plan after U.S. Airways sought bankruptcy protection.

In 2012, the U.S. Court of Appeals for the District of Columbia Circuit affirmed a ruling that a 45-day delay in making a lump-sum payment from the pension plan was unreasonable. The appellate court remanded the case to the U.S. District Court for the District of Columbia “to calculate the appropriate amounts.” The appellate did not decide the duration of a “reasonable” delay because the three members of the panel did not agree.

On remand, the original plaintiffs in the case pressed their rights to a class action, which was denied, but reversed by the appellate court. Upon notice from the parties that they were negotiating a settlement based on anticipated class certification, the district court certified a class. 

The settlement represents a recovery of more than 70% of the damages for the class based on an administrative delay of 45 days at 6% interest. The district court also approved an award of attorneys’ fees to the plaintiffs’ counsel.

The opinion in Stephens v. U.S. Airways Group is here.