A class action suit filed last week alleges that Citgo shortchanged retirees by millions of dollars in pension funds.
Retired employees in two Citgo Petroleum Corp. pension plans filed a lawsuit Aug. 3 alleging their retirement benefits were diminished because of out-of-date actuarial data. The allegations apply to former Citgo employees who retired before Jan. 1, 2018, according to the complaint.
Citgo is the U.S. subsidiary of the state-run oil company Petróleos de Vetróleos de Venezuela S.A.
For married participants, the default form of pension payment is a joint and survivor annuity, which provides the participant a payment stream for life, and the life of a spouse.
But when the Citgo plan converts a single life annuity to a joint and survivor annuity, it uses mortality data that is 50 years out of date, according to the lawsuit filed in District Court for Northern Illinois.
This shortchanging resulted in the plaintiffs receiving less than the “actuarial equivalent” of their vested accrued benefit, violating the Employee Retirement Income Security Act, which protects retirement benefits.
"This case alleges that Citgo penalizes retirees for being married by paying them less than the full value of the pensions they earned," said Mary Bortscheller, a partner at the Cohen Milstein law firm representing the plaintiffs. "We look forward to helping married retirees get the full value of the pensions they earned from decades of work at Citgo."
The class action lawsuit was filed by plaintiffs Leslie Urlaub and Mark Pellegrini.
Urlaub, who worked for Citgo Petroleum for nine years as a project engineer and project manager, said he chose the 50 percent joint and survivor annuity offered by the plan. Pellegrini worked for 32 years at the Lemont Refinery, which in 1997 became owned and by Citgo Petroleum Corp. When he retired from Citgo, he elected to take the 75 percent joint and survivor annuity.
Had Urlaub and Pellegrini’s benefits been determined using reasonable actuarial assumptions, their joint and survivor annuities would be larger, the lawsuit claims.
The complete article can be viewed here (subscription required).