U S WEST to Increase Pension Trust Fund; Pension Amounts Unaffected
The additional funding is part of the stipulated settlement to a two-year- old retiree class-action lawsuit concerning technical language in U S WEST's pension plan documents. The company also will pay the fees for the plaintiffs' counsel, Curtis Kennedy. The settlement, filed today in U.S. District Court in Denver, must be approved by the court before it's final.
"Pension checks will not be affected in any way by this proposed settlement," said Sharon Naylor, vice president-Human Resources for U S WEST, Inc. "Retirees will continue to receive the same pension amounts they've been receiving since Feb. 1 of 1996."
The lawsuit, brought by U S WEST retiree Clayton Unger in November of 1994, alleged that the company was not authorized by its pension plan to pay administrative expenses from its pension trust fund. The original 1994 complaint asked that $30 million in administrative costs -- more than three times the amount of this settlement -- be paid to the trust.
U S WEST maintained -- and still maintains -- that its administrative costs are allowable under the plan and the Employee Retirement Income Security Act of 1974 (ERISA), the federal law that governs pension trust operations. ERISA clearly allows such trusts to cover their administrative costs, provided that the language in the pension plan documents also allows it.
The plaintiff and his attorney, Curtis Kennedy, claimed that the language in U S WEST's pension plan documents was not sufficiently clear. U S WEST disagreed, as did Robert Gallagher, a nationally recognized expert in ERISA law with the Washington, D.C.-based firm of Groom and Nordberg. Gallagher supported the company's position on this matter.
"We have consistently acted in good faith regarding our pension obligations, and followed all federal laws that govern pension trusts," said Naylor. "The administrative costs we charged to our trust are completely legitimate, and we'll continue charging them in the future.
"Nevertheless, we had a lawsuit to contend with and a key decision to make. We could go forward with the litigation or we could agree to add some money to our pension plan. We determined that we'd rather put money in the pension fund, where it will ultimately benefit retirees, than spend it on attorney's fees for this needless litigation."
The settlement was negotiated as the lawsuit reached the most time- consuming and costly steps in the litigation process.
"It came down to a semantic dispute over interpretation of highly technical legal language," Naylor added. "However, some retirees were led to believe either that their pensions were in jeopardy or that this lawsuit would
increase the amount of their pension checks. Neither claim is true, and retirees' concerns were unfounded."
The class of people covered by this lawsuit includes about 38,000 current retirees, 14,000 deferred vested pensioners and 57,000 active employees -- potential future retirees.
U S WEST is in the connections business, helping customers share information, entertainment and communications services in local markets worldwide. For 1995, U S WEST reported total revenues of $11.7 billion.
WHAT PEOPLE ARE SAYING ABOUT THIS LAWSUIT:
Robert Gallagher, ERISA legal expert, Groom and Nordberg, Washington, D.C.:
"U S WEST's actions were consistent with the terms of the pension plan, consistent with the applicable law and consistent with common practice in American business. Most large companies charge pension plan-related expenses related to their pension plans."
Ed Jensen, U S WEST retiree, Tucson, Ariz.:
"The logic of the lawsuit escapes me. It just doesn't make sense. Why wouldn't it be legitimate for U S WEST to cover its administrative costs? It would seem to me that it would have to be standard practice.
"When I left U S WEST, I chose a lump-sum payment over a monthly pension check. I put that money into various accounts and investment funds -- essentially building my own pension trust. Besides my own time spent tracking my investments' performance, I'm charged some sort of fee to cover administrative costs. Why is that any different than U S WEST's practice? If you want a decent return, it has to work that way."
Ted Couch, U S WEST retiree, Denver, Colo.:
"I'm puzzled by the outcome of this lawsuit. It appears that retirees aren't getting any more money -- only additional funding for the pension trust, which is already over-funded. In cases like this, it seems that the only people who walk away with more money are the lawyers who file the suit."
SOURCE U S West, Inc.
/CONTACT: Lois Leach of U S WEST, 303-793-6355/
CO: U S WEST, Inc. ST: Colorado IN: TLS SU:
CW-KL -- LAM100 -- 1505 01/27/97 19:06 EST http://www.prnewswire.com
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|Date:||Jan 27, 1997|
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