Pender v. Bank of America Corp., et al., 05-238-C (W.D.N.C.)

This case challenges the legality of the design and operation under ERISA of two large retirement plans sponsored by Defendant Bank of America Corporation (“Bank of America” or the “Bank”) for the Bank’s employees. The first is the Bank of America Pension Plan (the “Pension Plan”), which is a “cash balance” defined benefit pension plan. The other is the Bank of America 401(k) Plan (the “401(k) Plan”), which is a defined contribution retirement savings plan.

The Complaint alleges that the Pension Plan calculates benefits based on an improper definition of “retirement” – or more specifically, “normal retirement age,” which the Plan defines as the 5th anniversary of each employee’s date of hire, regardless of age. We argue that this fictitious retirement “age” is essentially a gimmick designed to mask the fact that the Plan fails to pay participants the benefits to which they are legally entitled. It results, according to the Complaint, in illegal forfeitures of accrued pension benefits, systematic age discrimination, and excessively “backloaded” benefit accruals.

The Complaint also alleges that the Bank caused the 401(k) Plan, in a series of transactions implemented over several years, to transfer approximately $3 billion from individual participant accounts to the Pension Plan, where the assets were not placed in individual accounts but were commingled with other Pension Plan assets. The IRS, which regulates pension benefit plans, recently concluded after conducting an audit of the Plans that, just as we argue, these transfers resulted in unlawful forfeitures of participants’ accrued benefits. See Bank of America March 2005 SEC 10-K. The transfers also resulted in unlawful use of 401(k) Plan participants’ retirement savings by the Pension Plan and the Bank.

Motions in the case are currently awaiting decision by the Honorable Graham C. Mullen, Senior Judge, Western District of North Carolina (Charlotte).

Current and former participants in the Bank’s Pension or 401(k) Plans are encouraged to contact us to provide us with information about their individual circumstances or understand the case in more detail.

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