Sprint, Former Employees Urge Kansas Federal Court to Approve $3.5M Deal to Resolve Benefit Calculation Suit

Three former Sprint Communications employees asked a Kansas federal court to approve its multimillion-dollar proposed class action against Sprint, which the parties reached through mediation. According to the former employees, the settlement will permit them to end their suit without testing their novel legal theory while still increasing their pension benefits for life and the benefits for their beneficiaries.

The terms of the settlement deal allocated $5,000 for each of the three workers, about $1.2 million for the plaintiffs’ attorneys, and the remainder of the funds for just over 1,000 proposed class members. The class members include all those plan participants and beneficiaries who began receiving a 50%, 75%, or 100% joint and survivor annuity or a qualified pre-retirement survivor annuity on or after November 11, 2016, through the date of judgment.

The three former employees, McFadden, Schmidt, and Doncevic, originally filed suit against Sprint and its employee benefits committee in November 2022 over Sprint’s pension plan. Sprint closed the plan to new employees on August 11, 2005, and froze benefit accruals on December 31, 2005.

A joint and survivor annuity allows a retired employee to receive pension payments for life and, after their death, for their spouse to receive pension payments for the remainder of their life. ERISA requires joint and survivor annuities to be at least as valuable as single-life annuities.

However, the former workers accused the subsidiary of T-Mobile of using outdated mortality tables to calculate their pension benefit payments. Specifically, they claim that Sprint used old life expectancy and interest rates to convert single-life annuities to joint and survivor annuities. As a result of Sprint’s methodologies, the former employees allege that those workers who chose to set aside savings for their spouses were shortchanged, as Sprint’s methodology depressed the value of the joint and survivor annuities.

HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.

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