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Benefits October 29, 2007
NY Life Suit Approaches End with $14M Settlement Pact
October 29, 2007 (PLANSPONSOR.com) - New York Life
Insurance Company has agreed to a $14-million settlement of a
long-running legal battle with an employee group over the
management of its retirement savings programs.
Reported by Fred Schneyer
Attorney Eli Gottesdiener, a plaintiffs’ lawyer in the 2000 lawsuit, said in a news release that the agreement covers four plans: a defined benefit program for agents, a defined benefit plan for employees and 401(k) plans for agents and employees.
The announcement said the class includes 35,000 current and former participants in the 401(k) plans who had a 401(k) account balance between January 1, 1994 and December 31, 2005, and the approximately 32,000 current or former workers who were defined benefit participants as of December 31, 2005.
After the deduction of attorneys’ fees and costs, 70% of the remainder of the $14 million will be deposited in the 401(k) defined contribution plans and 30% in the defined benefit programs, according to the announcement.
The 401(k) plans’ proceeds will be distributed to qualifying 401(k) plan participants in a one-time lump sum payment based on a formula that takes into account the amount of participants’ account balances. Current and former agents and employees who qualify will receive payments under the settlement between $50 and $1,000.
The two defined benefit plans will receive deposits that will not increase benefits paid to individual participants but will strengthen the funding of the plans and participants’ retirement security.
The plan trustees also agreed they will continue to receive independent advice on their investments through May 31, 2010, the announcement said.
The lawsuit in Mehling, et al. v. New York Life Ins. Co., et al., Civ. Action No. 99-5417 (E.D Pa.), alleged, among other things, that the New York Life retirement plans were imprudently invested by the plan trustees in proprietary mutual funds offered by the company (See NY Life Employees Given Go-Ahead in Class-Action Suit ).
Defendants, including New York Life and the Boards of Trustees of the plans, denied the allegations and asserted that the plans’ investments have at all times been prudently selected.
U.S. District Judge Bruce W. Kauffman of the United States District Court for the Eastern District of Pennsylvania on has preliminarily approval the pact, according to the announcement. Kauffman has scheduled a final hearing in the case for January 2008.