| July 25
July 25 Primerica advisers gave Florida workers
poor retirement advice, say current and former Florida public
employees in a slew of legal challenges now facing the company.
But so far, the company is holding its own as it works its
way through 21 securities arbitration cases and seven court
cases all focused on the same issue: Public employees eligible
for the State of Florida Public Retirement System say PFS
Investments Inc, a Primerica Inc unit, advised them to
permanently give up their rights to lifetime pension payments
and switch to an alternative plan that subjected them to stock
After they made their elections, in the mid-2000s, the stock
market headed south and many of their portfolios lost money. The
value of their individual accounts in the new plan will never be
worth what they could have collected from the pension, they say.
"We believe the cases are without merit, and we are
vigorously defending them," said Mark Supic, executive vice
president of media relations for Primerica, via email.
The employees behind the cases include police and
corrections officers who were nearing retirement when they made
that choice, said Andrew Tramont, the lawyer in Coral Gables,
Florida, who is handling most of the cases. He is already
representing 90 employees and expects to file cases on behalf of
Primerica brokers targeted them, the cases allege, in the
hopes that workers would transfer their accounts to Primerica
when they retired and buy the company's financial products. But
choosing the lifetime safety of a traditional pension made more
sense, given the employees' ages and long years of service,
The disputes spotlight the risks of making certain
retirement-planning moves at the wrong time. Many employees
involved in the litigation opted for the investment plan in 2005
and 2006, shortly before markets plunged during the 2007-2008
financial crisis. That caused many clients involved in the cases
to lose money and delay their retirement, Tramont said.
Even so, their legal challenges may face a tough road ahead,
based on initial outcomes: Primerica won two of the first three
arbitration cases, including one on July 8, dismissed in part
because the claim was too old. In a third case, decided in June,
arbitrators awarded an employee $187,000 - a win for the
employee, but a fraction of the nearly $2.3 million in total
damages she had requested. Primerica recently filed a court case
to try to overturn the ruling.
Last year, a Florida state judge dismissed one of the
lawsuits against Primerica after ruling the public employees
filed it too late. The employees are appealing.
Tramont, who represents the employees, says he is not
troubled by the outcomes, which so far seem to be going in
Primerica's favor. Facts differ in every case, so "different
outcomes are to be expected," he said. "But the common thread
running through all of the cases is that Primerica hurt a lot of
A spokesman for the Florida State Board of Administration,
which oversees the pension and investment plans, declined to
comment on the cases.
Primerica's legal battles stem from a change to Florida's
retirement system in 2002. It gave employees the option to
switch from a traditional pension plan, in which they would
receive lifetime benefits based on their salaries and years of
service, or convert the value of their pension to a lump sum
payment which they could invest in mutual funds and other
securities offered through the state retirement system.
Long-serving employees involved in the cases blame a group
of Primerica brokers and the company for inducing them to make
the riskier choice by presenting it as more promising: The
investment plan would generate more retirement income than the
pension plan, employees say they were told. Relatives could also
inherit the accounts upon the employees' deaths, an option not
available through the pension plan.
The Primerica advisers, however, did not lay out the market
risks the employees would be taking on, the employees say in one
court complaint. They also failed to make clear that choosing
the investment plan meant giving up a benefit that allowed them
to collect both a paycheck and a pension check for up to five
years if they continued to work past retirement age.
Primerica is mounting a vigorous defense, pouring $3.9
million into defending the claims during the first quarter of
2013 alone, according to its most recent public financial
Florida gives its employees extensive information to
evaluate their retirement plans, said Supic, the Primerica
spokesman. The two plans are designed to be of equivalent
economic value, he said. Furthermore, "employees who filed the
cases never invested their money with the Primerica - their
assets remain in (the) state-held retirement fund," Supic said.
"Moreover, many employees' retirement accounts at FRS have
benefited from the most recent market rise, making their claims
even more speculative," Supic said.
The company may also be trying to ward off concerns about
the cases among its own investors. Tramont's firm has been
promoting its services to "generate interest" in filing cases,
the company said in the recent quarterly financial disclosure.
Some of them could be dismissed for being too old, it said.