Howard University has reached a settlement agreement in a proposed class action lawsuit that accused the institution of using outdated mortality data to calculate retirement benefits, resulting in reduced pension payouts for retirees. The case was filed under the Employee Retirement Income Security Act by former university employee Stephen Whetstone.
According to a joint status report filed in D.C. federal court, Whetstone and Howard University reached the settlement following a February mediation session and are currently working to finalize the agreement. The parties plan to seek preliminary court approval of the deal by June 12.
Outdated Actuarial Assumptions
Whetstone, who worked at Howard for 14 years before retiring in September 2018, alleged that the university used a mortality table from 1984 and a 7% interest rate to convert single life annuities to joint and survivor annuities. This resulted in lower pension payments than beneficiaries would have received using more current actuarial assumptions.
The complaint provided a specific example of the financial impact: Whetstone selected a qualified joint and survivor annuity that paid almost $585 monthly, but if Howard had used recent mortality data instead of the 1984 table, he would have received approximately $18 more per month. Over the course of his retirement, the outdated actuarial assumptions reduced his benefits by over $2,880.
Legal Proceedings
U.S. District Judge Loren L. AliKhan partially granted Howard University’s motion to dismiss in September, ruling that Whetstone’s claim about being denied benefits due to the plan’s omission of its conversion formula was filed too late. However, the judge allowed Whetstone’s allegations that Howard University breached its fiduciary duty and violated ERISA’s actuarial equivalence requirement to proceed.
Siri & Glimstad LLP attorneys Oren Faircloth and Scott Haskins represent Whetstone in the case. Howard University is represented by Sarah M. Adams, William J. Delany, and David N. Levine of Groom Law Group Chtd.
The case, Whetstone v. Howard University et al., was filed in the U.S. District Court for the District of Columbia.