Citgo Employees Seek Settlement for Pension Plan Discrepancies

A group of retired Citgo Petroleum employees has filed for a settlement of their lawsuit regarding harm from their pension plan’s actuarial assumptions. The proposed settlement includes a $10 million increase in plan benefits for 1,743 members of the class, along with $4.75 million in attorney fees. The U.S. District Court for the Northern District of Illinois granted preliminary approval of this settlement on October 4.

This case highlights ongoing legal challenges related to defined benefit plans and the calculations of joint and survivor benefits. Plaintiffs argue that pension plans must use reasonable actuarial assumptions, a claim supported by a recent ruling where the court denied Citgo’s motion to dismiss, emphasizing that ERISA imposes such a reasonableness standard. The Citgo plan was amended in 2018 to incorporate updated actuarial assumptions, reflecting new standards that could potentially impact pension payouts.

The settlement showcases a trend in similar legal cases, where fixed dollar amounts are awarded and spread among affected class members to rectify alleged financial discrepancies. This situation illustrates the continuing complexities and litigation risks that pension plan sponsors face concerning actuarial assumptions and the adequacy of benefits provided to participants.