AT&T to Settle Pension Suit for $184 Million

AT&T Inc. has agreed to a proposed $184.1 million settlement to resolve a class action lawsuit that accused the company of shortchanging thousands of retirees by using outdated mortality tables to calculate pension benefits. The agreement, filed July 9 in U.S. District Court for the Northern District of California, ends a legal fight that began nearly six years ago.

The case, Scott, et al. v. AT&T Inc., alleged the company violated the Employee Retirement Income Security Act by relying on actuarial assumptions adopted in 1984. Those assumptions, based on a 1971 Group Annuity Mortality table, were used to convert single-life pension benefits into joint-and-survivor annuities for married retirees. Plaintiffs argued the outdated factors reduced monthly payments below what ERISA requires.

Under the proposed deal, it will provide more than $149 million in value to current and future retirees.

That includes $113.5 million in additional pension benefits and lower administrative costs for retired class members. Future retirees will benefit from amended joint-and-survivor annuity factors, estimated to be worth an additional $35.6 million. The company also agreed to review those factors at least once every 10 years to ensure continued compliance with ERISA.

Separately, the firm would pay up to $35 million in attorneys’ fees and litigation costs. The settlement requires preliminary approval from U.S. District Judge James Donato before notices are sent to class members.

A long road to settlement

The complaint, filed in October 2020, challenged two aspects of AT&T’s pension plan: reductions applied to employees who retired before age 65, and reductions applied to joint-and-survivor annuities elected by married participants.

Plaintiffs said both sets of factors produced benefits worth less than the actuarial equivalent of the standard single-life annuity guaranteed by ERISA.

They argued this caused retirees to forfeit vested benefits and, in some cases, alter retirement decisions based on inaccurate information.

The company denied the allegations throughout the litigation. It maintained its pension plan always complied with ERISA and defended the case vigorously. The case never reached trial, but it involved extensive discovery, expert testimony, class certification proceedings, summary judgment briefing and three mediation sessions over several years before the parties reached an agreement.

These kinds of lawsuits have become more common since 2018, with dozens of employers facing similar claims over outdated mortality assumptions.

The agreement is the largest of its kind so far, topping recent agreements with Raytheon (now RTX) for $59.2 million in February 2021, MetLife for $23 million in June 2026, and Citgo Petroleum for $10 million in October 2024. While each case is different, the pattern suggests pension plans that haven’t updated their actuarial tables in decades are increasingly vulnerable to legal challenges.

What happens next

A preliminary approval hearing is scheduled for August 13.

If the settlement receives final approval, retired class members would begin receiving payments within 90 days after the agreement becomes effective, according to the proposed schedule.

The firm did not return a request for comment on the settlement.