Delta Airlines violated federal pension law by using outdated actuarial assumptions that reduced benefits for married retirees with joint-and-survivor annuities, a retired flight attendant alleges in a proposed class-action lawsuit.
Marsha R. DuVaney began collecting retirement benefits in 2020 after working for Northwest Airlines for 33 years. After Delta acquired Northwest, it used outdated or unreasonable actuarial conversion factors when calculating joint-and-survivor benefits, resulting in lower lifetime payments. She currently receives a 50% joint-and-survivor annuity, with her husband as the beneficiary.
These annuities are designed to continue paying benefits to a surviving spouse after a retiree’s death. Delta applied conversion factors that reduced the value of these benefits below what federal law requires, resulting in an estimated $12,605 reduction in the current value of DuVaney’s pension benefits, the lawsuit alleges.
ERISA requires that optional forms of pension benefits, including joint-and-survivor annuities, be actuarially equivalent to a retiree’s standard single-life annuity. In this case, however, retirees allege that Delta’s actuarial assumptions failed to meet that standard, reducing the total expected value of benefits paid to married retirees and their spouses over time. Although a reduction in monthly benefits is expected when a retiree elects spousal coverage, the lawsuit claims Delta’s calculations went further than ERISA allows.
DuVaney is asking the court to reform Delta’s pension plans to comply with ERISA’s actuarial equivalence requirements, recalculate benefits and pay amounts allegedly underpaid to herself and other class members.
An earlier class-action lawsuit filed on behalf of thousands of active and retired Delta Airlines pilots resulted in a $16 million cash settlement and one million stock purchase warrants to certain retired pilots and other class members. The plaintiffs argued that various amendments and practices related to the company’s pension plans caused pilots to forfeit accrued and vested pension benefits to which they were entitled under ERISA.
If successful, DuVaney’s lawsuit could affect thousands of married retirees and prompt broader scrutiny of how employers calculate spousal pension benefits, according to Lawsuits News & Legal Information.
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