40,000 to Be Paid in Pension Case Settlement

About 40,000 workers and retirees will get payments totaling approximately $100 million from the Pension Benefit Guaranty Corp.

The corporation had refused to pay them benefits when their companies’ pension plans failed.

The payments stem from settlement of a 1988 class-action lawsuit against the government corporation that insures corporate pension funds. Plaintiff workers and retirees charged in the suit that they deserve the money because a change in pension laws in 1974 shortens the employment time required before a person becomes eligible to receive a pension from a company.

Until the enactment of the Employee Retirement Income Security Act in 1974, most pension plans required employees to work for many years before they became vested.

ERISA requires plans to provide for faster vesting. The companies were given time to adapt to the new standard.

One of the lead plaintiffs in the case, Mary Collins of Medford, Mass., should receive about $50,000, said Stephen Bruce, a lawyer who worked on the class-action suit.

From 1976 through ‘81, the years covered by the settlement, about 11,000 underfunded pension plans where shut down without having adopted the ERISA vesting standards, Pension Benefit Guaranty Corp. said.

According to the settlement, participants who had 10 or more years of service will get about 80% of the benefits they should have received when their pension plans failed. If a beneficiary is deceased, the payment will go to his or her heirs.

Participants with between five and nine years of service will receive somewhat less. A worker with nine years of service, for example, might get a $500 settlement, Bruce said.

Settlement benefits are to be paid within 38 months after final approval by the U.S. District Court for the District of Columbia.