Plaintiffs have filed an Employee Retirement Income Security Act (ERISA) lawsuit against MetLife, focused on the firmās defined benefit (DB) pension plan.
The complaint was filed in the U.S. District Court for the Southern District of New York. It names as defendants the Metropolitan Life Insurance Company and the Metropolitan Life Insurance Company Employee Benefits Committee. Ā
According to plaintiffs, MetLife is failing to pay the full promised value of alternative benefits available under its Metropolitan Life Retirement Plan. The complaint suggests MetLife is failing to meet its obligations to ensure different annuity options under the plan are actuarially equivalent to the planās default benefit, as required under ERISA and the terms of the plan itself.
āBy not offering actuarially equivalent pension benefits, Metropolitan is causing retirees to lose part of their vested retirement benefits in violation of ERISA Ā§ 203(a), 29 U.S.C. Ā§ 1053(a),ā the complaint says.
According to the complaint, MetLife sponsors the plan for its eligible employees and the eligible employees of certain participating affiliates. The plan transitioned from a traditional defined benefit plan to a cash balance benefit plan effective January 1, 2002. All new hires after December 31, 2002, were automatically enrolled in the cash balance benefit planāreferred to in the complaint as the āCurrent Planāāwhile employees hired before December 31, 2002, had to choose between moving to the cash balance plan or remaining grandfathered in the preexisting defined benefit plan, i.e., the āTraditional Plan.ā
The argumentation in the complaint considers the topic of the āactuarial equivalenceā of different types of annuity benefits to be paid under the current and former plan designsāin particular, it questions the method of calculation of joint/survivor annuity benefit payments as compared with single annuity benefit payments.
According to the complaint, to convert a retireeās default annuity benefit into an alternate annuity benefit (such as a joint/survivor annuity), the present value of the aggregate (i.e., total) future benefits that the participant (and, if applicable, the beneficiary) is expected to receive under both the default benefit and the alternate annuity benefit must be determined. The present values are then compared to determine the conversion factor. There are two main components of these present value calculations: an interest rate and a mortality table.
The argument continues as follows: āThe plan specifies the actuarial assumptions used to calculate the conversion factor (and thus the value of the alternate annuity benefits). Specifically, in terms of a mortality table, the plan uses the 1971 Group Annuity Mortality Table for Males (the 1971 GAM table), set back one year for participants or former participants and set back five years for beneficiaries. The 1971 GAM table was developed over 45 years ago, when people had much shorter life expectancies.ā
According to the complaint, Metropolitanās use of the 1971 GAM mortality table āis inherently unreasonable because of its outdated accelerated mortality rates.ā
āThe plan also uses a 6 percent interest rate,ā the complaint says. āThe combined result of using a 6% interest rate and the 1971 GAM mortality table is that defendants do not provide actuarially equivalent alternate annuity benefits, but instead provide alternate annuity benefits that are materially lower than the benefits that would be a true equivalent to default benefits. Accordingly, defendants caused plaintiffs and class members to unknowingly forfeit and lose part of their vested benefits due under the terms of the plan.ā
The complaint goes on to argue that defendants have violated ERISAās anti-forfeiture rule and caused plaintiffs and other participants and beneficiaries of the plan injury āevery month.ā
āPlaintiffs accordingly seek an order from the court reforming the plan to conform to ERISA, payment of future benefits in accordance with the reformed plan as required under ERISA, payment of amounts im