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Duke Energy will pay $30million to settle a class action over changes to its retirement plan.
The lawsuit representing 20,000 Duke retirees and employees was filed in 2006. A federal judge in Anderson, S.C., approved the settlement on Monday.
The plaintiffs claimed Duke broke federal age-discrimination laws when it converted its defined-benefit pension plan to a cash balance plan in 1997.
Instead of receiving retirement benefits based on years of service, the lawsuit said, the new plan would combine the characteristics of a traditional pension plan with that of a 401(k) plan, to which employees contribute a portion of their salaries.
Workers have lost up to half of their accrued benefits under such changes, the suit charged, saying it disproportionately harms people older than 40. The change allowed Duke to cut its annual contributions to the pension plan from $54million a year in 1995 and 1996 to zero from 1997 through 2002, it said.
Duke denied those claims. The company said it never misled workers about the change and didn't reduce accrued benefits for participants. Duke said cash-balance plans "provide for a more even accrual of benefits over an employee's working career" than traditional plans.
U.S. District Judge Michelle Childs accepted a settlement in which Duke does not admit wrongdoing. Childs awarded the plaintiffs' attorneys $9million in fees to come out of the $30million settlement.
