Never miss a story — sign up for PLANSPONSOR newsletters to keep up on the latest retirement plan benefits news.
Compliance December 2, 2009
Verizon Charged with Involuntary Transfer of Retiree Pension Accounts
December 2, 2009 (PLANSPONSOR.com) - Verizon retirees have filed a complaint for violations of the Employee Retirement Income Security Act (ERISA) charging that they and over two thousand others were involuntarily switched post-retirement from the Verizon Communication Inc. pension plans to pension plans sponsored by a newly spun-off company, Idearc Inc.
Reported by Rebecca Moore
According to a news release, the complaint says that less than
two years after Verizon transferred the retirees, Idearc encountered financial
problems and began cutting back various earned retiree benefits. These benefit
reductions were not experienced by retirees remaining in Verizon’s pension
plans. Idearc filed for Chapter 11 bankruptcy in March 2009.
According to the complaint, in mid-November, 2006, after
each of the three plaintiffs who filed the suit had been retired for at least
ten years, they together with more than 2,000 others were involuntarily
reclassified and switched into pension plans run by Idearc. All three were
fully vested in the Verizon pension plans with rights to continued payment of
monthly annuities and other Verizon welfare benefits. The plaintiffs say they
did not consent to be switched over to Idearc’s pension plans.
From the point the spinoff was concluded on November 17,
2006, Verizon treated the retirees’ rights to the prior Verizon retiree
benefits as being terminated. The retirees say no pension plan language
identified and traced the transferred monies to actual liabilities owed to
particular plan participants for the payment of pension benefits, and when
Verizon conducted the transfer, there were no existing plan terms giving the
plan sponsor or any other entity the authority to change the status of the
retirees.
The retirees tried to administratively challenge their
involuntary transfer to Idearc and its pension plans, with no success.
According to the news release, among other things, the complaint charges pension plan administrators with:
- Failure to provide requested plan documents;
- Breach of fiduciary duty for refusal to disclose pension related plan information;
- Breach of fiduciary duty for failure to comply with pension plan document rules;
- Unlawful refusal to make payment of Verizon pension plan benefits; and
- Unlawful interference with retirees’ rights to receive Verizon retiree pension and welfare benefits.
The suit asks that all retirees who were transferred to
Idearc be put back into Verizon’s pension and welfare benefit plans, and that
Verizon’s and Idearc’s pension plan administrators be order to pay a daily
penalty for failure to timely provide requested records.
The complaint is here.