SETTLEMENT OF CLASS ACTION LAWSUIT ON PENSION BENEFITS
PLANO, Texas, Dec. 27 /PRNewswire/ -- J.C. Penney Company, Inc., (NYSE: JCP) in keeping with the settlement of a class action lawsuit, provides the following Joint News Release on behalf of the Company and the Plaintiffs. The Company emphasizes, as stated in the Joint News Release, that the settlement will be paid by the well-funded JCPenney Pension Plan, not by the Company. The financial impact on the J. C. Penney Company will be insignificant. JOINT NEWS RELEASE Judge Joe Kendall of the federal district court in Dallas has preliminarily approved a settlement of a class action lawsuit brought by two former employees of J.C. Penney regarding their pension benefits. The settlement was reached prior to any ruling on the merits of the lawsuit. The lawsuit alleged that the JCPenney Pension Plan violated the Employee Retirement Income Security Act of 1974 (ERISA) by offsetting estimated social security benefits that were greater than actual social security benefits in calculating class members' pension benefits. Any such overestimation primarily resulted from an assumption in the Pension Plan's formula about earnings prior to employment with J.C. Penney that was not correct for employees who entered the workforce relatively late in their lives. J.C. Penney maintains that its method of offsetting estimated social security benefits complied with the law, was a common practice, and was intended to treat employees with comparable J.C. Penney service and salary history under the Pension Plan in a consistent manner. The pension formula that is the subject of the lawsuit is no longer in effect. Under the terms of the settlement reached between the plaintiffs and the JCPenney Pension Plan, class members will be given the opportunity to have their pension benefits recalculated under an agreed-upon formula. They will receive a percentage of the difference, if any, between what they already received and what the settlement formula offers. The parties are unable to determine the exact amount of an individual's settlement payment in advance of the claims procedure the settlement creates. Class members will receive various levels of recovery money from no recovery to several thousand dollars. The total payments under the settlement will not exceed $80 million. Benefits under the settlement will be paid by JCPenney Pension Plan. J.C. Penney states that its Pension Plan is financially sound and that the settlement will pay these additional benefits without adversely affecting the existing or future pension benefits of any current or former employee. The parties and their counsel believe prompt implementation of this negotiated settlement is preferable to further prosecution of a lengthy and expensive lawsuit. Judge Kendall has scheduled a hearing on January 30, 1995, to decide whether the settlement should be approved. -0- 12/27/94 /CONTACT: Hank Rusman of J.C. Penney, 214-431-1316/ (JCP)
CO: J.C. Penney Company, Inc. ST: Texas IN: REA SU:
WB -- NY052 -- 8407 12/27/94 17:20 EST EST electroshock therapy.