Kohler, the plumbing product and cabinetry maker, is being sued by retirees alleging underpayment. A lawsuit filed on Tuesday in US District Court for the Eastern District of Wisconsin alleges that Kohler uses out-of-date life expectancy data when calculating pension benefits of workers opting for pension plans that provide post-death payments to their surviving spouses. Plaintiffs represented by Siri & Glimstad law firm claim this results in lower pension payments than should be received due to older mortality tables being used for calculation.
The lawsuit alleges that Kohler violates an ERISA provision mandating that pension plans use up-to-date actuarial assumptions when calculating benefits and has failed to either update these assumptions sooner or change its plan to incorporate updated formulas retroactively.
ERISA requires pension plans to offer alternatives to the standard single-life annuity that pays out a monthly benefit for life, such as joint and survivor annuities that pay the spouse of deceased retirees and certain and life annuities that guarantee payments over an agreed upon number of years. To convert from single life annuity payments into these alternative types, pension plans employ complex formulas taking into account interest rates and mortality tables.
Kohler used outdated mortality tables as of January 1, 2021 and according to the complaint used this strategy to deny retirees who opted for joint and survivor annuities or certain and life annuities the equivalent actuarial value of benefits they earned prior to 2021.
Mr. Jones contends that the Kohler Plan is ambiguous and thus, entitled to benefits interpretation that was fair, reasonable and not subject to bias or prejudice. However, the court disagreed with Mr. Jones by applying a well-established legal principle which holds that any ambiguities must be construed against its drafter and interpreted against them.
Kohler corporate pension plan is a defined-benefit plan, providing participants with a monthly payout until death or until their annuity choice at retirement time has taken effect. Kohler Corp provides both single-life and joint-and-survivor annuities to employees who opt in. In general, to qualify for joint-and-survivor annuity options you must have worked for the company at least 10 years while also completing at least five years of vesting service; additionally, an annuity must be chosen prior to retirement age 45. For any further inquiries about their plans please reach out to either your benefits representative or contact 401(k)@kohlercorp.com