A $3.5 million class settlement benefiting Sprint Communications LLC retirees received initial court approval on Tuesday. Experts say the action paves the way to resolve litigation that challenges how the T-Mobile subsidiary calculates pensions for certain married workers.
Three former Sprint Communications employees asked a Kansas federal court to approve its multimillion-dollar proposed class action against Sprint. The terms of the settlement deal allocated $5,000 for each of the three workers, about $1.2 million for the plaintiffs’ attorneys, and the remainder of the funds for just over 1,000 proposed class members, according to JD Supra. The class members include all those plan participants and beneficiaries who began receiving a 50 percent, 75 percent, or 100 percent joint and survivor annuity or a qualified pre-retirement survivor annuity on or after November 11, 2016, through the date of judgment.
The agreement reached through mediation with Sprint is slated to increase the monthly payments of the 1,009 Sprint retirees who chose pension packages that include post-death payments for their surviving spouses. It represents about 36 percent of the retirees’ total estimated damages, according to the settlement, reports Bloomberg Law.
Judge Daniel Crabtee granted preliminary approval to the deal in an order docketed in the U.S. District Court for the District of Kansas. Bloomberg Law notes several employers have been sued over pension actuarial data.
The three former employees originally filed suit against Sprint and its employee benefits committee in November 2022 over Sprint’s pension plan. Sprint closed the plan to new employees on August 11, 2005, and froze benefit accruals on December 31, 2005.
A joint and survivor annuity allows a retired employee to receive pension payments for life and, after their death, for their spouse to receive pension payments for the remainder of their life. The Employee Retirement Income Security Act requires joint and survivor annuities to be at least as valuable as single-life annuities, notes JDSupra.
The former workers said the T-Mobile subsidiary used outdated mortality tables to calculate their pension benefit payments. Specifically, they claim that Sprint used old life expectancy and interest rates to convert single-life annuities to joint and survivor annuities. As a result of Sprint’s methodologies, the former employees allege that those workers who chose to set aside savings for their spouses were shortchanged, as Sprint’s methodology depressed the value of the joint and survivor annuities.
By Leslie Stimson, Inside Towers Washington Bureau Chief
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