Compliance November 16, 2021

Huntington Ingalls Settles Lawsuit Over Use of Outdated Mortality Tables

The company has agreed to recalculate monthly benefits for participants and beneficiaries in the ‘legacy’ part of a pension plan.

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Huntington Ingalls Industries has agreed to pay $2.8 million to settle a lawsuit claiming it used outdated mortality tables to calculate monthly benefits for participants and beneficiaries in the “legacy” part of the Huntington Ingalls Industries Inc. Newport News Operations Pension Plan for Employees Covered by United Steelworkers Local 8888 Collective Bargaining Agreement.

According to the settlement agreement, within 60 days of its final approval, the settlement amount less plaintiffs’ awards and attorneys’ fees will be allocated to class members in proportion to the total value of their past and future pension benefit payments. Using that rate for each class member, a mortality table approved by the IRS on April 3, 2019, and updated interest rate assumptions, a monthly benefit increase will also be calculated for each participant and beneficiary in the class.

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The Huntington Ingalls complaint stated that the defendants calculated an annuity conversion factor—and thus the present value of the non-single life annuities (SLAs)—for the legacy part of their pension plan using a so-called “1971 Group Annuity Mortality Table.” Beyond projecting that both men and women will live shorter lives in retirement compared with newly prepared tables, the 1971 table assumes 90% of the company’s employees are male and that 90% of contingent annuitants are female—all while using a 6% interest rate.

“Using the 1971 table, which is based on data collected roughly 50 years ago, depresses the present value of non-SLA annuities, resulting in monthly payments that are materially lower than they would be if the defendants used reasonable, current actuarial assumptions,” the complaint alleged. “By using outdated mortality assumptions to calculate non-SLA annuities under the legacy part, the defendants improperly reduce the plaintiff’s benefits.”

The lawsuit was among a number of similar suits filed against large companies over the past three years. The cases have reached various results.

Products November 16, 2021

John Hancock Retirement Offers Fiduciary Help to Plan Sponsors

Employers can outsource 401(k) plan administration and fiduciary risk through the firm’s partnerships with select TPAs and 3(38) investment management providers.

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John Hancock Retirement, a Manulife Investment Management company, has introduced Signature Fiduciary Connect, a new service model giving plan sponsors additional support for the administrative and fiduciary duties they need to offer workplace 401(k) plans.

With Signature Fiduciary Connect, employers can outsource plan administration and fiduciary risk through John Hancock’s partnerships with select third-party administrators (TPAs) and 3(38) providers. The company says this service model helps reduce administrative burdens and mitigate risk for employers and offers employees a retirement plan that includes John Hancock’s personalized engagement and financial wellness tools.

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“It frees human resources [HR] and benefits staff to focus on other employee needs, by providing ERISA [Employee Retirement Income Security Act] experts for plan design and compliance, utilizing outside investment expertise to select investment options, and maintaining a plan sponsor website and generating reporting,” the company says.

Signature Fiduciary Connect is administered though John Hancock Retirement and is available to plan sponsors, TPAs and retirement plan advisers to assist with designing and managing a workplace 401(k) plan. The fiduciary component is managed through TPAs acting as fiduciary plan administrators or named fiduciaries, and 3(38) providers act as 3(38) investment management fiduciaries. John Hancock currently has partnerships with TAG Resources, AMP (Powered by Nova 401(k) and AFS), Paylocity, Wilshire and Raymond James and is evaluating expanding fiduciary partners in the coming months.

“We are excited to have Signature Fiduciary Connect available and believe it helps to solve for some of the hurdles that exist for employers that want to offer a workplace retirement plan but may not have the in-house expertise or the resources to build and run it,” says Jack Barry, vice president, product development, strategy and transformation at John Hancock Retirement.

“As the retirement plan provider servicing the most small and midsized plans, our position in the market has given us both the perspective and the insight to build Signature Fiduciary Connect to be very helpful to employers,” says Gary Tankersley, head of sales and distribution, John Hancock Retirement. “We believe that retirement plans should work for both plan sponsors and plan participants and, through our external partnerships, we are confident that implementing and servicing a retirement plan can be an easy and seamless exercise.”

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