A U.S. District Court in Washington, D.C. has approved a $1.3 million settlement in a class action lawsuit against Howard University regarding alleged underpayment of pension benefits. The ruling affects approximately 1,788 retirees who participated in the university’s pension plan. This case highlights the importance of fair pension calculations under federal law.
The lawsuit, Whetstone v. Howard University, Civil Action No. 2023-2409, was initiated by Stephen G. Whetstone, a former employee of Howard University. He claimed that the university's pension plan used outdated actuarial assumptions that resulted in lower monthly benefits for retirees. The settlement agreement was reached after three years of litigation and mediation.
The dispute arose when Whetstone and other retirees alleged that their pension benefits were calculated using the 1984 Unisex Pension Mortality Table and a 7% interest rate. They argued that these assumptions were outdated and led to underpayments compared to what they would have received under more current assumptions. The case was brought under the Employment Retirement Income Security Act of 1974 (ERISA), which sets standards for pension plans in private industry.
Whetstone's claims included violations of the actuarial equivalence requirement under ERISA, which mandates that joint and survivor annuities (JSAs) must be actuarially equivalent to single life annuities (SLAs). The court had previously allowed some claims to proceed while dismissing others as time-barred.
Judge Loren L. AliKhan presided over the case and granted Whetstone's motion for preliminary approval of the settlement. The court found that the settlement was the result of arm's-length negotiations and provided meaningful relief to class members. The settlement will provide increased monthly pension benefits to affected retirees, with payments expected to be implemented within 150 days of final approval.
The settlement agreement defines the class as all participants and beneficiaries of the pension plan who are receiving monthly payments and have an annuity start date between January 1, 1995, and January 1, 2025. The agreement allocates the $1.3 million settlement fund to two subgroups based on the date they began receiving benefits.
Subgroup A, which includes members whose annuity start dates are after August 17, 2017, will receive benefit increases based on individual calculations of alleged underpayments. Subgroup B, with members whose annuity start dates are before that date, will receive increases based on their current benefit levels.
The approval of this settlement is significant as it not only resolves the claims of the class members but also sets a precedent for how pension plans calculate benefits under ERISA. It underscores the necessity for pension plans to use reasonable actuarial assumptions to ensure fair treatment of retirees.
Looking ahead, the settlement is expected to be implemented soon, but there may still be opportunities for appeals or related cases to emerge. The court's ruling affirms the importance of protecting retirees' rights under pension plans, ensuring that they receive the benefits they are entitled to.