PwC, Partners Hit with Class-Action Pension Suit
The company, as well as its partners who oversee the pension and retirement plans, face a class-action lawsuit that contends they used the pension plans as tax shelters for well-off partners to the detriment of regular employees and the public.
Pension and Investments reported that PwC's cash balance plan, with $1.4 billion in assets at the end of June 2003, and a 401(k) plan, with $1.6 billion in assets for the fiscal year ended Sept. 30, 2003, are at the heart of the suit. (A separate profit-sharing plan for partners is not affected.)
In the suit filed in federal district court in East St. Louis was amended on Jan. 28 and charges PwC and its partners with coming up with “a brazen, unlawful scheme ... to game the tax and pension laws in order to improperly pad the partners' retirement benefits and take-home pay at the expense of both rank-and-file PwC employees and the public,” Pension and Investments reported.
The suit was brought by former employee Timothy D. Laurent and contends that the firm, which has been known for it's creative cash-balance pension funds, intentionally broke age- and income-discrimination provisions of federal law.
By “engaging in multiple layers of deception,” the suit alleges, PwC and its partners reduced “benefits to the paid rank-and-file employees down to the bare minimum thought need(ed) to keep the shelter afloat.”
While federal pension law shields employers from liability for the investment performance of participants' 401(k) plan options, it does not apply to defined benefit plans, Pension and Investments reported, meaning that a ruling in favor of Laurent and other participants could cost the firm hundreds of millions of dollars.
“For all the reasons that are discussed in the briefs, we believe that our plans are lawful and fully compliant with ERISA and we deny all the allegations in the lawsuit,” said David Nestor, a PwC spokesman in New York.