Judge rejects US Bancorp severance offer in pension payment case

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A federal court judge in Minneapolis has denied a motion for American bank to dismiss an ERISA complaint filed by former employees alleging that the company reduced their pension payments in two defined benefit plans due to incorrect benefit calculations.

“The plaintiffs retired before they reached the age of sixty-five, so their monthly pension benefits had to be adjusted downward to reflect a longer benefit withdrawal period,” explained U.S. District Court Judge Nancy E. Brasel, in her Oct. 17 opinion in Adams et al. against US Bancorp et al.

“They allege that the discount and mortality rate assumptions used to make this adjustment led to an inappropriate overall reduction in their total benefits from what they would have received had they retired at sixty‐five. years,” she wrote.

“Defendants seek dismissal, arguing that their methodology did not violate” sections of ERISA, the judge added. “The court denies the motion.”

The three former employees filed a lawsuit in March 2022, seeking class action status. Each took early retirement on different dates, and each alleged that their benefits were not actuarially equivalent to their respective individual life annuities at their normal retirement age, even though ERISA requires actuarial equivalence.

The complaint concerns certain participants in the US Bank Pension Plan and the US Bank Legacy Pension Plan, whose benefit payments began on or after March 1, 2016, according to the original complaint. The size of the plans’ assets was not identified in the original complaint.

“Plaintiffs claim that for some plan participants, benefits were reduced approximately forty percent more than they would have been if defendants had used U.S. Treasury discount and mortality rate figures. “wrote the judge. “The result, according to the plaintiffs, is that they receive less benefits than they are entitled to each month.”

Acknowledging that other federal courts have diverged on the terms “actuarial equivalence” and “reasonableness” in calculating early retirement pension payments, the judge wrote that “for now, accepting the factual allegations plaintiffs as true, they have made a plausible claim.”

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Elaine R. Knight