Link:https://www.jdsupra.com/legalnews/pension-plan-actuarial-assumption-5162449/
Excerpt:
One recent line of ERISA litigation involves the actuarial equivalence factors used by defined benefit pension plans. The lawsuits apply both to active defined benefit pension plans and pension plans that have been “frozen” as to future benefit accruals.
….
Basically, the lawsuits allege that the plan, through the use of out-of-date and “unreasonable” actuarial assumptions and conversion factors, has “overcharged” participants when converting from the Life Annuity Benefit to payment in an alternate payment form.
….
In many of the cases, the challenge focuses on allegedly outdated mortality tables that do not take improved life expectancy into account. In some situations, the actuarial factors (including mortality table assumption) were established decades ago and have never been updated. In essence, the lawsuits allege that the plan (by not using updated factors and tables) is not paying out the full value of the participant’s benefit when the participant has elected payment in an alternate payment form.
Author(s): Gregg Dooge
Publication Date: 20 Jan 2022
Publication Site: JD Supra