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New York Life Settles Lawsuit Over Agent Retirement Plan

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New York Life Settles Suit On Agent Retirement Plan

By Barry Higgins and Allison Bell

New York Life Insurance Company has agreed to settle a dispute over a change in an agent retirement plan.

The company says the settlement agreement calls for it to make retirement benefits available to more agents; reduce the tax burden on the agents by, subject to Internal Revenue Service limits, paying the benefits through a tax-qualified plan; and contribute $16 million to a settlement fund that will pay pension benefits to 3,000 former New York Life agents.

The dispute involves the New York Life Insurance Company Retirement Plan and agents who began representing New York Life before 1991. The affected agents originally were eligible to receive monthly “Senior NYLIC” retirement benefit payments once they represented the company for at least 20 years, according to court pleadings filed by lawyers for the agents.

The lawyers for the agents filed the suit, Lucich vs. New York Life Insurance Company, in February 2001 in the U.S. District Court in New York.

New York Life acknowledged that the NYLIC plan was a tax-qualified plan governed by the Employee Retirement Income Security Act of 1974.

In 1991, New York Life began making a portion of the Senior NYLIC benefit payments with checks from the NYLIC Retirement Plan. The company made up the difference between what the ERISA plan was paying and what the agents expected with checks for a “non-qualified excess benefit.” The company said the non-qualified benefit was not subject to ERISA.

Because New York Life treated the other benefit as a non-ERISA benefit, the company failed to abide by ERISA vesting, accrual and notice rules in connection with the non-qualified benefit, the agents argued.

Now, “as part of the settlement, New York Life has redesigned the [non-qualified excess] benefit on a going-forward basis in a way that eliminates the technical dispute over whether the benefit is, or is not, an employee pension benefit,” the parties say in a press release describing the settlement agreement.

“This was a good outcome,” New York Life spokesman William Werfelman says about the settlement agreement.

Michael Lieder, a Washington lawyer who helped represent the plaintiffs, is also praising the settlement agreement.

“We believe the agents can continue to enjoy their careers at New York Life secure in the knowledge that their non-qualified benefit will be protected, while those agents who previously left New York Life and submit valid claims under the settlement will be fairly compensated,” Lieder says.

Reproduced from National Underwriter Life & Health/Financial Services Edition, March 5, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.


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