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Citgo Petroleum Corp. has agreed to boost the value of retirees' pensions by $10 million to resolve a class action alleging the company underpaid early retirement benefits. The lawsuit claimed Citgo used outdated mortality tables, relying on data from the 1970s, to calculate pensions, according to court filings in Illinois federal court.

Citgo Mortality Table Suit : Settlement Details

The retirees filed a motion for preliminary approval of the settlement on Wednesday, marking a major development in the Employee Retirement Income Security Act (ERISA) suit. This motion follows the September report of a tentative agreement between Citgo and the pensioners to end the litigation.

Citgo will add $10 million to the value of the annuities for affected retirees. This increase is calculated as additional present value to their retirement benefits. In addition to the pension boost, the settlement sets aside $4.75 million for attorney fees, expenses, and class representative service awards.

Class Definition and Impact

The settlement covers all plan participants and beneficiaries whose joint and survivor annuity or pre-retirement survivor annuity benefits began between January 1, 1995, and January 1, 2018. These participants received lower payouts due to the use of the outdated mortality tables and interest rates challenged in the lawsuit, according to court documents.

For a specific subclass, those who began receiving benefits within six years of the lawsuit’s filing, the increase in benefits represents more than 87% of what plaintiffs originally sought, based on expert calculations. According to the retirees' memorandum, the recoveries per class member exceeded those seen in similar ERISA actuarial equivalence cases.

Citgo Mortality Table Suit : Lawsuit History

The Citgo Mortality Table Suit was first filed in August 2021. The plaintiffs achieved class certification in May 2023, following the court’s denial of Citgo's motion for summary judgment. This ruling paved the way for the current settlement agreement.

The plaintiffs are represented by a coalition of attorneys from Cohen Milstein Sellers & Toll PLLC, Stris & Maher LLP, Feinberg Jackson Worthman & Wasow LLP, and the University of San Diego Law School. Citgo’s legal team includes lawyers from Jones Day.

Requests for comment from both Citgo representatives and attorneys for the proposed class have not yet been answered.

Conclusion

The settlement in the Citgo Mortality Table Suit is poised to bring significant financial relief to Citgo retirees who were shorted on their early retirement payouts. By resolving the claims related to outdated mortality tables, Citgo has agreed to rectify pension benefits for over two decades' worth of retirees.