A major purpose of ERISA is to help employees in Washington, D.C., and around the country secure appropriate retirement and health benefits. However, benefit payments may not be dished out correctly if old data is used to determine annuity payment amounts. This, in a nutshell, is what's at the heart of a lawsuit involving a large military shipbuilding company's non-single-life-annuity plans.
In a complaint filed in the U.S. District Court for the Eastern District of Virginia, the company is accused of using outdated mortality data that was first published in 1971. This data assumes 90 percent of the company's employees are male and 90 of the contingent beneficiaries are female. A 6% interest rate is also used. If company retirement plan participants opt for a single life annuity (SLA), they'll receive benefits at a flat monthly rate for each year of service from their retirement date until they pass.
The mortality data and interest rate are used together to determine a non-SLA plan participant's benefits based on a prediction of how long each employee and their selected beneficiaries may live. According to the complaint, employees are receiving lower benefits because changes in life expectancy aren't considered. Also, the data has been updated several times since then, although the company still defers to the 1971 table. Parties filing the complaint want the court to order the company to reform their non-SLA plans in accordance with ERISA requirements and provide payments that were improperly withheld.
An ERISA benefits attorney taking a similar case may also look at how a company calculates its retirement benefits. Newer data showing that the gender breakdown of a company's employees and their beneficiaries has also changed significantly over time may be used to further emphasize how using outdated data can negatively affect retired employees. A lawyer might also look for other possible ERISA violations that may be relevant.