In a published opinion, the U.S. Court of Appeals for the Eleventh Circuit reversed a Georgia federal district court’s 2024 dismissal of a proposed ERISA class action brought by retirees William Drummond and Richard Odom against Southern Company Services, the Southern Company Pension Plan, and its Benefits Administration Committee, and remanded for further proceedings. The panel held that ERISA’s “actuarial equivalence” requirement demands the use of reasonable, realistic mortality and interest-rate assumptions when converting a single-life annuity to a joint-and-survivor annuity, and that excessive charges for preretirement survivor benefits (“QPSA”) can violate ERISA’s nonforfeiture rules.
Why This Decision Matters
The Eleventh Circuit rejected the contention that plans may rely on any written actuarial assumptions—no matter how outdated—emphasizing that assumptions must be those a reasonable actuary would use at the time of the benefit determination. The court also concluded that plans cannot charge participants more for preretirement survivor annuity coverage than it reasonably costs to provide, and that excessive QPSA charges can constitute a prohibited forfeiture.
What the District Court Did
The district court granted a Rule 12(b)(6) motion and dismissed all four claims in the Second Amended Complaint, which included claims under ERISA’s actuarial equivalence and anti-forfeiture provisions and a fiduciary breach claim.
What the Eleventh Circuit Decided
The Eleventh Circuit held that “actuarial equivalence” is a term of art tethered to reasonable, realistic actuarial assumptions, and that using assumptions as much as decades out of date can plausibly render joint-and-survivor annuity payments less valuable than the earned single-life annuity. On the anti-forfeiture claims, the court concluded that converting a protected single-life annuity into a less valuable joint-and-survivor annuity can constitute a forfeiture, and that Section 1055(i) permits only QPSA charges that reasonably reflect the increased cost of providing that benefit. Accordingly, the court reversed the dismissal of all four claims and remanded.
How This Aligns with Other Developments
The panel noted alignment with the Sixth Circuit’s recent decisions reviving similar mortality table disputes and referenced actuarial materials discussed in a recent Supreme Court ruling to explain actuarial standards and practices.
What Happens Next
The case returns to the Northern District of Georgia for further proceedings, where plaintiffs may pursue their claims that outdated mortality assumptions reduced joint-and-survivor payments and that QPSA charges exceeded reasonable costs.
Key Takeaways for ERISA Plan Participants – Actuarial equivalence has teeth: plans must use reasonable, realistic mortality and interest-rate assumptions when converting benefits.
- Outdated mortality tables can plausibly shortchange married participants receiving joint-and-survivor annuities.
- QPSA charges must reasonably reflect the cost of providing preretirement survivor coverage; excessive charges may violate ERISA’s nonforfeiture rule.
- The Eleventh Circuit’s decision revives all claims and sends the case back to the trial court, signaling meaningful scrutiny of conversion factors and survivor-annuity charges.
- The ruling aligns with other appellate developments scrutinizing unreasonable actuarial assumptions.
Practical Implications
Participants and retirees who elected joint-and-survivor annuities should consider whether their plan used outdated mortality tables or fixed conversion factors that reduce monthly payments compared with a single-life annuity. Participants who did not waive preretirement survivor coverage should review whether annual QPSA charges reasonably track the cost of that protection.
Edelson Lechtzin LLP’s ERISA Experience
Edelson Lechtzin LLP represents workers, retirees, and plan participants in complex ERISA and employee benefits litigation nationwide. We have deep experience challenging practices that reduce participants’ vested benefits and scrutinizing actuarial methodologies in high-stakes pension cases. We are committed to advocating for employees and retirees to help ensure they receive the benefits they have earned.
Disclaimer: This post is for informational purposes only and does not constitute legal advice. Reading this post does not create an attorney–client relationship. You should consult an attorney about your specific circumstances.
Contact Us: If you are a worker, retiree, or plan participant with questions about how your pension benefits were calculated or about survivor annuity charges, contact Edelson Lechtzin LLP for a confidential consultation. We are here to help evaluate your options and protect your rights.