Monday, May 23, 2011
Supreme Court Reverses Earlier ruling in class action suit brought by Cigna Employees
5:20 PM | 
Posted by
pensionfinancialservices |
A victory for retirement plan sponsors.
As CFO Magazine reported recently, the Supreme Court reversed 2 lower court rulings in a class action suit involving Cigna when it switched from a traditional defined benefit retirement plan to a cash balance plan in 1998.
”Cigna employees had argued that the new summary plan description (SPD) misled them into thinking they would be getting the full value of the first plan plus new benefits accruing from the date of the change. But, as stated in the detailed plan document, and as is common practice with such plan changes, each worker's cash-balance account had a starting balance that was less than the value of his or her defined-benefit account,” says CFO.com.
Please note that you can find on our website (www.PensionParameters.com) a new brochure explaining Cash Balance Plans and why they are beneficial to small-to-mid-sized businesses as an adjunct to other plans. “We can’t emphasize enough the importance of explaining how changing from one type of plan to another affects the bottom line of a plan and affects employees,” says Kevin F. McCormack, President, Pension Parameters Financial Services, Inc.
“Working with a financial advisor that keeps both the employer and its employees fully in the loop by fully explaining how the transition from one kind of plan to another can fully prevent this kind of expensive litigation and HR trouble for companies,” he says.
"Basically the Supreme Court rejected the notion that there is a 'one-size-fits-all approach to claims based on faulty communications, such that all participants automatically recover additional benefits that were never intended under the terms of the plan,” said a spokesperson.
“Our basic style of doing business is that one style of plan will never fit all companies, which is why we are known for our personal service and the time we take to explain all steps carefully,” says McCormack.
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