Employees Sue Sempra Unit Over Change in Pension Plan

Two Southern California Gas Co. employees sued the company in federal court Friday, alleging that its conversion to a so-called cash-balance pension plan discriminated against older workers.

The suit, filed in U.S. District Court in Los Angeles, claims that the company illegally halted benefits paid to older workers after it converted from a traditional pension system to a cash-balance plan in 1998.

Traditional pensions promise to pay a set percentage of working income for the rest of a worker’s life. In cash-balance plans, retirement payouts are based instead on how much money is accrued on an employee’s behalf in a company-sponsored savings plan.

Ed Van Herik, a spokesman for Southern California Gas, said the Los Angeles-based unit of Sempra Energy had not seen the suit and could not comment. However, he said the company believed the cash-balance plan would withstand any legal challenge.

The suit was filed by David Hurlic, 51, and Susana H. Selesky, 54, who have each worked for the company for more than 20 years. It seeks class-action status on behalf of an estimated 1,000 workers.

Hurlic and Selesky allege that the payouts under the cash-balance plan would be grossly inferior to what they would have received under the old pension plan, and that the company did not provide proper disclosure of the reduction in benefits as required under federal law.

In addition, the plaintiffs said the plan was discriminatory because older, long-time workers would be most adversely affected by the conversion to the new plan.

The plaintiffs did not file the suit until now because the plan had a five-year grandfather clause that temporarily disguised the effect of the change, said their attorney, Jeffrey Lewis, a partner at Lewis, Feinberg, Renaker & Jackson in Oakland.

The suit is similar to dozens of class-action cases that have been filed against Fortune 500 companies across the country, stemming from a wave of conversions from traditional pensions to cash balance plans.