Delta Accused of Shortchanging Married Retirees’ Pensions

The class action is filed by retired flight attendant Marsha R. DuVaney, who worked as a flight attendant for Northwest for approximately 33 years and began collecting benefits in early 2020. She currently receives a 50% joint and survivor annuity, with her husband as the beneficiary. She alleges that after Delta acquired Northwest, the airline used outdated or unreasonable actuarial conversion factors when calculating joint-and-survivor benefits, resulting in lower lifetime payments for married retirees, according to Bloomberg Law.

Joint-and-survivor annuities are designed to continue paying benefits to a surviving spouse after a retiree’s death. Under the lawsuit, Delta allegedly applied conversion factors that reduced the present value of those benefits below what federal law requires. According to the complaint, the use of outdated actuarial assumptions resulted in an estimated $12,605 reduction in the present value of DuVaney’s pension benefits.

Married Pension Benefits

The Federal Employee Retirement Income Security Act (ERISA), a 1974 federal law governing employer pensions, governs employer-sponsored pension plans and imposes fiduciary duties on plan administrators. ERISA requires that optional forms of pension benefits, including joint-and-survivor annuities, be actuarially equivalent to a retiree’s standard single-life annuity.

In this case, retirees allege that Delta’s actuarial assumptions failed to meet that standard, reducing the total expected value of benefits paid to married retirees and their spouses over time. While a reduction in monthly benefits is expected when a retiree elects spousal coverage, the lawsuit claims Delta’s calculations went further than ERISA allows.

In other words, if you are a married Delta retiree, you probably chose a joint-and-survivor annuity so your spouse would keep getting checks after you die. To do that, Delta reduced your monthly benefit — which is normal. However, Delta allegedly used stingier math than ERISA allows when calculating that reduction, which meant that you and your spouse may have been underpaid: You could end up with lower lifetime income than if the plan used updated actuarial math.

This isn’t the first time that Delta (and other airlines) has been accused of mismanaging retirement plans.  According to one law firm, a class action lawsuit filed on behalf of thousands of active and retired Delta Air Lines pilots resulted in a $16 million cash settlement and 1 million stock purchase warrants to certain retired pilots and beneficiaries.

DuVaney is asking the court to reform Delta’s pension plans to comply with ERISA’s actuarial equivalence requirements, recalculate benefits, and pay amounts allegedly underpaid to herself and other class members. If successful, the case could affect thousands of married retirees and prompt broader scrutiny of how employers calculate spousal pension benefits.