The numbers at the heart of this case have a subtly concerning quality. Not the $184 million, even though that amount is startling enough. More focus should be paid to the other figures, 1971 and 1984. These are the years from which AT&T’s pension computation tools were derived: conversion factors that haven’t been significantly updated since Ronald Reagan’s first term and a mortality table that was published more than 50 years ago. In the decades that followed, Americans’ life expectancy increased, their financial circumstances changed, and the age of those who relied on these calculations increased. Apparently, the math did not keep up.
The case, Scott et al. v. AT&T Inc., was submitted to the Northern District of California federal court in October 2020. The complaint’s main claim was that AT&T shortchanged about 300,000 current and former employees who selected joint-and-survivor annuities, in violation of the Employee Retirement Income Security Act, or ERISA. Because it continues to pay out to a spouse after the employee’s death, married workers usually choose that pension option. The plaintiffs claimed that AT&T routinely paid out less than what ERISA requires—benefits that must be the actuarial equivalent of a typical single-life annuity—by using those outdated actuarial assumptions. For real families, the difference adds up to real money over the course of years of retirement.
The parties came to a $184.1 million proposed settlement in July 2026, almost six years after the case was filed. Of that, an estimated $35.6 million in additional value would flow to future retirees through updated annuity calculation factors, while $113.5 million would go toward improved retirement benefits for retirees currently receiving benefits from the plan. Up to $35 million in legal fees were also asked for. The settlement is still awaiting final court approval as of this writing.
Like most businesses in these circumstances, AT&T denied any misconduct. The company said in a statement that it reached a settlement to avoid the cost and distraction of protracted litigation; this is standard language that is almost boilerplate, but it’s probably not totally false. The cost of these cases is high. Before an agreement was reached, this case required years of discovery, numerous expert battles, and three different mediation sessions.
This settlement is especially noteworthy due to its size. It surpasses previous agreements with Raytheon, MetLife, and Citgo Petroleum by a significant margin and is the largest in a growing wave of similar ERISA lawsuits that have targeted pension plans across major American employers since roughly 2018. Attorneys and benefits analysts have been keeping a close eye on this type of litigation, and AT&T’s settlement is probably going to increase that focus. Plan sponsors everyplace seem to be feeling a little more uneasy these days when they look at their own actuarial tables.
A structural reform is also part of the settlement: going forward, AT&T would have to review and update its joint-and-survivor annuity calculation factors at least once every ten years. That aspect is just as important, if not more so, than the monetary sum. A small but significant change in how the business handles its responsibilities to retirees would result from periodic reviews, which would require the numbers to reflect the real world.
The immediate relief is palpable for the workers caught up in this conflict. If the court approves the settlement, retired class members may start getting additional payments within ninety days of it taking effect. Since distributions depend on final approval and the particulars of each person’s benefit calculation, it is still unclear how much each retiree will receive.
It’s difficult to ignore the fact that older Americans are, by definition, the most impacted by these out-of-date tables; these individuals planned their retirements using estimates that subtly underpaid them. They were unaware of the importance of closely examining the actuarial footnotes. Most people don’t. That’s exactly where the issue existed for years without anyone noticing.
