In exchange for releases of all claims that were brought or could have been brought via the instant action, Defendants would create a settlement fund to be funded by a “Total Settlement Amount” of $267 million. See Agreement § 2A.
The Net Settlement Benefit available to the Class will equal the Total Settlement Amount minus Court-authorized deductions: court-approved litigation and settlement administration expenses, attorneys’ fees, and named plaintiff service awards. See Agreement § 3C and Mailed Notice § 4. These deductions are each subject to Court approval.
No portion of the $267 million settlement is conditioned on applications by Class members: 100% of the Total Settlement Amount (net of Court-approved deductions) will be applied to increase Class members’ retirement benefits under the Plan. Id., § 11C.
The Agreement’s plan of allocation calls for a division of the settlement proceeds based on the relative alleged underpayments Class members experienced using an assumed projection rate equal to the applicable 30-year Treasury rate plus 1 percentage point to determine what participants should have been originally paid. See Agreement § 3B. This represents the calculation of whipsaw benefits that the Class could have reasonably expected to receive had the litigation continued and Plaintiffs prevailed through final judgment and appeal. All calculations – of both the estimated settlement benefits (for purposes of notice) and final benefits for purposes of distribution – were and/or will be completed by an ERISA Enrolled Actuary engaged by Plaintiffs’ counsel for these purposes. Id. § 3A.
Prior to arriving at each Class member’s individual net settlement benefit, the individual gross settlement benefit will be determined based on the difference between the lump sum that should have originally been paid and the account balance lump sum that was originally paid, brought forward with interest. Id. § 3B. The individual net settlement benefit will then be determined by applying a factor to the individual gross settlement benefit that represents a pro rata reduction to account for (1) the member’s share of the overall litigation risk (in that the sum of all individual gross settlement benefits is slightly less than the total) and (2) all court-approved deductions (i.e., litigation and settlement administration expenses, attorneys’ fees and class representative service awards, if any). Id. § 3C. Under the Agreement, in no event will any Class member’s net settlement benefit be less than $100. Id. § 1HH.
Each Class member’s net settlement benefit will be paid in a lump sum and, to the greatest extent possible, as a tax-qualified settlement benefit. Id. § 15. Class members will have the option of electing to roll the payment over to an IRA or receive a direct distribution, net of the Plan’s withholding of income taxes. Id. § 13B.