When determining alternative pension benefits (such as joint and survivor annuities and early retirement benefits), a recent court decision held that underlying actuarial assumptions selected decades ago do not violate federal law simply because they are outdated and may result in a pension benefit that is less than using more current actuarial assumption.
A retiree brought a class action against his former employer, Partners HealthCare System, Inc. (Partners), alleging that the early retirement joint and survivor annuity benefits from Partners’ defined benefit pension plan could not be actuarially equivalent to the plan’s single life annuity because it used inflated interest rates and outdated mortality tables to calculate these alternate benefits. The claim alleged that the Partners’ plan used a 1951 Adjusted Mortality Table and interest rate of 7.5% and that the use of such dated actuarial assumptions was unreasonable under applicable law. Partners moved to dismiss the complaint for lack of standing and failure to state a claim. The court declined to dismiss on standing grounds, converted the motion to dismiss to a motion for summary judgment and then granted the motion in favor of Partners.
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