For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.
Duke Energy Settles Cash Balance Suit for $30M
The Charlotte (NC) Observer reports that the settlement will go to approximately 20,000 Duke Energy retirees and employees. U.S. District Judge Michelle Childs of the U.S. District Court for the District of South Carolina awarded the plaintiffs’ attorneys $9 million in fees to come out of the $30 million settlement, according to the Observer.
The lawsuit claimed that the Duke plan ran afoul of the Employee Retirement Income Security Act’s (ERISA’s) anti-discrimination and anti-backloading prohibitions, and claimed that the plan treated older workers differently than their younger counterparts in violation of the Age Discrimination in Employment Act (ADEA). These claims were dismissed in 2008 by another federal judge (see Duke Energy Cash Balance Ruling a Mixed Bag).
However, that same ruling included:
- a refusal to throw out a claim that the plan’s “wear away” effect violated the ADEA,
- permission for the plan participants to pursue claims that Duke breached its duties by misleading participants about the effect the conversion would have on their benefits,
- a finding that the plan improperly calculated lump-sum distributions by failing to perform a whipsaw calculation, and
- a finding that the plan applied the wrong interest rate credits for the plan years 1997 and 1998, rejecting Duke Energy’s claim that it was permitted to use interest rates found in a summary plan description rather than the rates in the formal plan documents.
You Might Also Like:
The Factors at Play in IBM’s Shift to a Cash Balance Plan Reviewed
Administration Basics: What Is a Strategic DB Plan Termination?
More Retirement Plan Sponsors Turning to Cash Balance Plans
Small business continues driving cash balance growth, with 92% of cash balance plans in place at firms with fewer than...
« The Principal Data Supports Increase in Auto Enroll Default