Verizon management retirees' pension benefit transfer suit dismissed
Reprints
A federal judge has dismissed a lawsuit by a group of Verizon Communications Inc. management retirees charging that an innovative pension de-risking arrangement that allowed Verizon to shed billions of dollars in pension plan liabilities violated federal law.
Under that arrangement, New York-based Verizon transferred about $7.5 billion in benefit obligations to Prudential Insurance Co. of America by purchasing a group annuity. The agreement covered some 41,000 management participants who retired and began receiving benefits before Jan. 1, 2010.
Among the retirees' allegations in the lawsuit filed last year in U.S. District Court in Dallas were that Verizon violated a provision in the Employee Retirement Income Security Act by not disclosing in its summary plan description that it retained the right to remove participants from its pension plan by transferring benefit obligations to an insurer.
The suit argued that ERISA regulations require a summary plan description to include a statement detailing the circumstances that could result in participants losing benefits they would reasonably expect the plan to provide.
In his ruling Monday, however, U.S. District Court Judge Sidney Fitzwater said the plaintiffs incorrectly interpreted that regulation as requiring that summary plan descriptions include when benefits will not be provided by a pension plan.
In dismissing the suit, Judge Fitzwater ruled, “It is clear that the regulation is focused on benefits to be provided under the plan rather than on the source of the benefits per se and does not relate to whether the plan itself must continue to pay the benefits.”
