AT&T Seeks to Settle Pension Class-Action Lawsuit for $184M

AT&T Inc. agreed to a proposed $184.1 million settlement to resolve a nearly six-year class action lawsuit, Scott, et al. v. AT&T Inc., alleging the company shortchanged thousands of retirees by using outdated actuarial assumptions to calculate certain pension benefits.

The settlement, filed July 9 in U.S. District Court for the Northern District of California, would provide more than $149 million in value to current and future retirees while requiring AT&T to update its joint-and-survivor annuity calculations and review those factors at least once every 10 years. The company would separately pay up to $35 million in attorneys’ fees and litigation costs.

The agreement requires preliminary approval from U.S. District Judge James Donato before notices are sent to class members.

The complaint, filed in October 2020, alleged that AT&T violated the Employee Retirement Income Security Act by relying on decades-old mortality assumptions to convert retirees’ single-life pension benefits into joint-and-survivor annuities for married participants. The plaintiffs argued the outdated factors reduced monthly pension payments below the actuarially equivalent value required under ERISA.

According to the settlement motion, the plaintiffs contended the plan continued using conversion factors adopted in 1984 and based on a 1971 Group Annuity Mortality table, despite significant changes in life expectancy. AT&T denied the allegations, maintained its pension plan always complied with ERISA and vigorously defended the case throughout the litigation. 

Under the proposed settlement, retired class members would receive $113.5 million in additional pension benefits and lower administrative costs, while future retirees would benefit from amended joint-and-survivor annuity factors estimated to be worth an additional $35.6 million. The agreement also requires AT&T to periodically review those factors to ensure continued compliance with ERISA. 

The case never reached trial but involved extensive discovery, expert testimony, class certification proceedings, summary judgment briefing and three mediation sessions over several years before the parties reached an agreement. 

The original complaint challenged two aspects of the pension plan: reductions applied to employees who retired before age 65 and reductions applied to joint-and-survivor annuities elected by married participants. Plaintiffs alleged both sets of factors produced benefits worth less than the actuarial equivalent of the standard single-life annuity guaranteed by ERISA, causing retirees to forfeit vested benefits and, in some cases, alter retirement decisions based on inaccurate benefit information.

The settlement is the largest to date in a recent series of lawsuits challenging pension plans’ use of outdated mortality assumptions. Similar cases have been brought against dozens of employers since 2018, according to Alston & Bird, although settlements do not establish legal precedent. 

The AT&T settlement also appears to have the largest settlement, topping recent settlements with Raytheon (now RTX) of $59.2 million in February 2021; MetLife for $23 million in June 2026; and Citgo Petroleum for $10 million in October 2024.

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.

AT&T did not return a request for comment.