|
 Printer-Friendly Version
Archived News Release--Caution:
information may be out of date.
For more information call: (202) 219- 8921.
The U. S. Labor Department has filed a friend-of-the-court
brief seeking to overturn a lower court ruling that may result in retirement
losses for 44,000 participants in a Unisys pension plan.
The Unisys savings plan invested $211 million in insurance
contracts with Executive Life Insurance Company, which was taken over by the
State of California in 1991.
Unisys, of Blue Bell, Pa., manufactures and sells computer
systems and employs 49,000 worldwide. It formed a savings plan in 1986 by
combining the pension plans of Sperry Corporation and Burroughs Corporation.
The combined plan offered several retirement options in which participants
could invest their pension accounts.
Both the successor and existing plans offered a fund which
invested in guaranteed investment contracts (GICs) as an option. With GICs,
insurance companies guarantee the repayment of the principal amount of the
investments at a specified time and payment of interest at a set rate over the
life of the contract.
Members of the plan's pension investment review committee
invested $211 million in plan assets in three insurance contracts of Executive
Life from 1987 to 1988. The plan was the largest investor in Executive Life
GICs nationally.
Twelve private lawsuits were filed alleging that plan
fiduciaries violated the Employee Retirement Income Security Act by investing
in the Executive Life contracts. The lawsuits alleged that the defendants
failed to adequately investigate the GICs prior to making the investments, to
properly diversify plan investments and to give participants adequate
information about risks involved with the investments.
The district court subsequently dismissed the lawsuits by
ruling in favor of the defendants.
In its brief, the department has asked the appeals court
to overturn the district court decision by remanding the case back to the
district court for trial. The department contends the court erred in its
conclusions and failed to consider all of the evidence in the case. The court
also failed to consider whether participants received sufficient information
needed to exercise control over their pension accounts and whether the
defendants acted prudently in investing such a significant amount of money in
Executive Life contracts.
The brief was filed May 2 with the Third Circuit Court of
Appeals in Philadelphia.
Archived News Release--Caution:
information may be out of date.
| 
