Full opinion text
(CORRECTED ) OPINION & ORDER KATHERINE B. FORREST, District Judge. In this certified class action, current and former employees of Foot Locker, Inc. (“Foot Locker” or the “Company”)—formerly known as the Woolworth Corporation—seek reformation of their pension plan to conform to the benefits they understood Foot Locker had promised them. The Class’s claims are brought under the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §§ 1001 et seq. The Court held a bench trial from July 14, 2015 to July 27, 2015. Twenty-one fact witnesses testified—15 live and six by deposition. The parties also called three expert witnesses: actuarial expert Lawrence Deutsch, E.A. and financial economist Clark L. Maxam, Ph,D. testified for the Class, and actuarial expert Lawrence Sher, F.S.A. testified for the defendants. The Court also received several dozen documents into evidence. This Opinion & Order constitutes the Court’s findings of fact and conclusions of law. The Class’s core claim is that the Company failed to inform its employees (the “Participants”) that plan changes that went into effect as of January 1, 1996 implemented an effective freeze on growth of the employees’ pension benefits—such that, for a period of time, additional periods of service did not result in additional benefits. The Class asserts that both class-wide and individual communications failed to clearly describe that the vast majority of Participants would be in a period of “wear-away” during which new accruals would not increase the benefit to which the Participant was already entitled. By contrast, while Foot Locker does not contest that the vast majority of Participants were in a period of wear-away, it claims that the Plan communications adequately disclosed the necessary details of changes to the Plan, Including an adequate description of the actual benefit a Participant would receive. According to Foot Locker, Participants had the information necessary to inform them they were in a period of wear-away. The Company concedes that it did not describe wear-away explicitly because it believed it was too complicated and its variations and- effects too unpredictable. According to Foot Locker, the additional disclosures might have had misled Participants into believing that they were entitled to a greater benefit .than' that to which they were entitled at termination. Having considered all of the evidence, at long last the dust on this case has settled and the Court does not believe it presents a close call. The evidence is overwhelming that the changes in the Retirement Plan resulted in an effective freeze of pension benefit accruals—and that this freeze was not adequately disclosed to Participants. Some Participants were severely impacted, some moderately, and a few not at all. In this regard, the evidence is clear that (1) wear-away was an intended feature of the Plan, (2) Plan disclosures and other communications to Participants failed to disclose wear-away, (3) this lack of disclosure was- intentional, (4) wear-away impacted thousands of employees—many; including the named plaintiff, terminated employment and were paid benefits while they were still in wear-away, (5) Participants did not understand that, as a result of wear-away, additional periods of service after January 1, 1996 would not and did not increase the benefit received, and (6) Appropriate disclosure would not have been too confusing and had it been given, Participants would have understood the consequences of wear-away. Both parties have compared this case to Amara v. CIGNA Corp., which the Court discusses below. This case presents a more egregious set of circumstances than Amara. In Amara, wear-away resulted, in large part, from fluctuations in interest rates; here, by contrast, the structure' of plan conversion guaranteed that most Participants would experience severe wear-away and that this was the expected source of cost savings to Foot Locker. I. FINDINGS OF FACTS ' Pursuant to Federal Rules of Civil Procedure 52, the Court’s findings of fact and conclusions of law are set forth below. A. The January 1, 1996 Plan Amendment Before 1996, benefits under Foot Locker’s pension plan were defined as an annual benefit commencing at age 65 and continuing for life. (Expert Opening Report of Lawrence Deutsch, E.A. (“Deutsch 6p. Report”) at 5.) This' benefit was calculated on the basis of a Participant’s compensation and years of service. (See id. at 2.) Under the prior Plan, Participants -who retired, or terminated before age 65 generally could either wait to start receiving benefits at age 65 or commence early- retirement distributions between ages 55 and 65, as further explained below. (Id. at 5.) Participants generally did not have the option to receive their benefits as a lump sum. Foot Locker converted the Plan to a cash balance plan as of January 1, 1996. Under the Amended Plan, Participants’ age-65 ’annual benefit accrued as of December 81, 1995 (the “December 31, 1995 accrued benefit” or the “December 31, 1995 frozen accrued benefit”) was converted into an initial account balance that would be used to calculate the benefit under the new formula. This conversion was effected in three steps: 1. First, the Plan calculated a lump sum value of the Participant’s age-65 accrued benefit under the old Plan, as of December 31,1995. 2. Second, the Plan discounted this age-65 lump sum to January 1,1996, to reflect the time value of money. 3. Third, the Plan further discounted this January 1, 1996 present value by a mortality discount—to reflect the possibility that the Participant might not live until age 65. (Deutsch Op. Report at 7.) Critically, the conversion at steps l and 2 was accomplished using a 9 % discount rate. Following the conversion, however, Participants’ account balances were credited with pay credits and an interest credit at a fixed annual rate of 6%. (See id. at 7-8.) Thus, while' Participants’ growing account balances created the appearance of pension benefit growth, this appearance was deceptive: the initial conversion was accomplished using a 9% rate (and a mortality discount) but each Participant’s account subsequently earned interest only at a 6% rate. As a result, the account balance under the new formula was—for a period of time (in many cases, years)— smaller than the December 31, 1995 accrued benefit. (See id.) The disparity between the December 31, 1995 accrued benefit and the benefit under the new formula triggered ERISA’s anti-cutback rule, which (with narrow exceptions inapplicable here) requires that a participant’s benefit entitlement, once earned, never be reduced due to a plan amendment. (Id. at 3.) To comply with the anti-cutback rule, the new Plan calculated benefits based on a “greater of’ formula. Under this formula, a Participant’s actual pension benefit was the greater of the December 31, 1995 accrued benefit (the “A benefit”) and the Participant’s cash balance benefit (the “B benefit”). (Id.) Until the cash, balance caught up to and surpassed the December 31, 1995 accrued benefit, the Participant was in a period of wear-away. That is, his or her pension benefit did not grow despite continued service. (Id. at 3-4.) As further explained below, the combined use of the 6% interest rate with the 9% discount rate mathematically guaranteed that most Participants would experience wear-away. This was understood by Foot Locker at the ¡time and relied upon as a source of savings. The “greater of’ comparison between the A and B benefits was an annuity-to-annuity comparison that was accomplished via the following steps. First, the A benefit (the December 31,1995 accrued benefit) was converted to an annuity. The B benefit (the Participant’s cash balance benefit) was projected to age 65 with a fixed -6% interest'rate, 'and converted to an annuity commencing at age 65. The last step was accomplished by Using either the 6% rate or the applicable rate under Internal Revenue Code (“IRC”) § 417(e) and the applicable mortality table under § 417(e). (See Deutsch Op. Report at 4, 6.) For the vast majority of Participants, the A benefit exceeded the B benefit. This meant that growth in the B benefit—the hypothetical account balance—due to additional service and interest credits did not represent any growth in the actual benefit a Participant would receive. (See id. at 4.) Under the new Plan, Participants could choose to receive their pension benefit as a lump sum or an annuity. Under ERISA, a lump sum cannot be less than the present value of a participant’s.age-65 benefit using the interest rate and mortality assumptions required by IRC § 417(e). “Lump sum” wear-away is more difficult to estimate because the § 417(e) rate—and thus the lump sum value of the December 31, 1995 frozen benefit—fluctuates from year to year. (Deutsch Op. Report at 16.) The cash balance conversion was also accompanied by a new 401(k) plan. Early Retirement Subsidy/Enhancement. The prior Plan included an early retirement subsidy, which worked as follows: Participants between age 55 and 65 had the option to receive early retirement benefits. For Participants with fewer than 15 years of service, early retirement benefits were equal to the Participant’s age-65 benefit reduced by 6% per year for early commencement. (Deutsch Op. Report at 5; Deutsch Tr. 115:19-20.) For Participants with at least 15 years of service, early retirement benefits were more favorable: they were equal to the Participant’s age-65 benefit reduced by 4% per year for early commencement. (Deutsch Op. Report at 5; Deutsch Tr. 115:20-21.) In other words, if a Participant younger than 55 accrued at least 15 years of service, he or she was entitled to 60%—that is, 100% piinus 4%, x . 10 years—of his or her accrued benefit payable as an annuity, though the Participant could not collect the annuity until 55 years old. (Sher Tr. 1506:12-1507:14.) . For Participants who worked past the age of 55, the value of their early retirement benefit decreased annually until age 65, at which point it carried no additional value. (Sher Tr. 1510:3-13.) The early retirement‘subsidy was an expensive feature of the Plan. (Deutsch't'r. 127:15-128:1.) ■ To receive the value of this subsidy under the new Plan, Participants had to elect an annuity form of payment, not a lump sum. (D.eutsch Tr. 128:2-6.) ■ However, approximately 97% of Participants elected lump sums. (Deutsch Op. Report at 16.) Under the new Plan, Participants who were at least age 50 and had at least 15 years of service on December 31, 1995 received an enhancement to their opening account balance. (Deutsch Op. Report at 8-9.) The size of the enhancement varied: at the optimal ages of 50 to 55, the enhancement was a 66.67% increase in the account balance; for. Participants older than age 55, the enhancement decreased, disappearing at age 65. • (Id. at 8-9.) B. Internal Communications At trial, the Court heard a significant amount of testimony—and received a large number of documents—regarding the internal process by which the January 1, 1996 Plan amendment was developed and implemented. In late 1994 or early 1995, Foot Locker’s management determined that, in light of the Company’s poor financial condition, it was necessary for the Company to cut costs, including in connection with retirement benefits, (Declaration of Patricia A. Peck (“Peck Deck”) If 3, ECF No. 333.) Roger N. Farah, Foot Locker’s Chief Executive Officer at the time, specifically requested a recommendation with" regard to cost savings available through the retirement plan. (See PX 24 (February); PX 632 (January).) A task force of four employees from the corporate benefits department was established: Tom Kiley, Carol Kanowicz, Marion Derham, and Pat Peck. (See Peck Tr. 1112:3-12; PX 24.) All four testified at trial (Kanowicz by deposition). Peck had been the Vice President " of Human Resources during the period at issue. In that capacity, she headed the Human Resources Department. (Peck Tr. 1103:14-20.) Peck reported to Barry Thomson, Foot Locker’s Chief Administrative Officer and a member of the Chairman’s Group. (Tr. 1105:14-22.) Peck was led the team responsible for coming up with recommended changes to "the Plan and communication to Participants. She was ultimately the person responsible for deciding which Plan recommendation and option(s) to present to management. (See Tr. 1109:2-6, 1113:5-1114:4; Peck Deck ¶3.) In understanding this assignment, Peck understood cost cutting was to play a significant role. (Tr. 1114:5-7.) Peck primarily worked with William M. Mercer Inc. (“Mercer”), the company’s actuarial advisor and Kiley—an individual with the necessary expertise who Peck believed understood the ins and outs of pension plans. (Peck Deck • ¶3; Tr. 1116:1-7, 1116:121117:2.) Based on Mercer’s advice, Kiley recommended that the Plan be converted to a cash-balance, plan—and that this change occur simultaneously with the institution of a 401(k) plan. (Peck Deck ¶ 3; Tr. 1118:3-12.) In 'February 1995, Peck learned that there was an aspect of the proposed cash balance plan that would have the effect of suspending the accrual of new benefits to employees for a period of time. (See Peck Deck ¶ 6; Tr. 1121:31-16; PX 84.) Notes that Peck took during a meeting with Mercer. that month reflect that she was informed that the discount rate used to convert the benefit from the prior plan into an initial account balance interacted with the GATT (General Agreements on Tariff & Trade) rate to create a suspension of new accruals. (See PX 84; Peck Tr. 1121:171122:1.) Her notes also reflect that she wrote, “does not constitute partial plan termin[ation]; nothing more than plan amendment.” (PX 84.) She later indicated in 'the same notes that there would be a “positive effect on P & L & contributions.” (Id.) Peck understood wear-away. (Peck Tr. 1128:4-8.) She also understood that it was not a required feature of plan design. (Tr. 1129:11-14, 1129:24-1130:5.) In other words, to convert to a cash balance plan did not require wear-away. The Company had the option of choosing a combination of rates that would cause wear-away—but it could also choose rates that would not cause wear-away. (Id.) In terms of Foot Locker’s choices, Peck understood that the rates chosen mathematically locked in wear-away. (Tr. 1130:9-14, 1130:21-1131:4.) Indeed, she, conceded that she had to know this in order to do her job. (Tr. 1131:5-7, 1142:1418.) Peck also knew that the Plan conversion created the cost savings that the Company sought. (Tr. 1131:8-11.) She understood that the cost savings were based directly on the required feature that Participants would not earn any additional benefits for a period of time. ' (Tr. 1131:12-19.) She also knew that a decline in the GATT fate would worsen the wear-away for Participants. (Tr. 1132:10-16.) She further understood that, for a Participant in wear-away, increases in that Participant’s cash balance account would not have increased any actual benefit to which that Participant was entitled. (Tr. 1133:1-9.) Pension benefits were part of an employee’s total compensation. (Tr. 1135:6-8, 1135:17-23.) When.an employee was in wear-away, his or her pension was not increasing in value; this was an effective decrease in such employee’s compensation. (Tr. 1135:24-1136:4.) Prior to May 1995, Peck had not made a determination as to the type of plan changes that would be recommended to management. (Tr. 1120:4-12.) Peck understood that a lump sum option could have been provided by way of amendment to the prior plan. (Tr. 1159:7-19.) . On May 1, 1995, P’eck made a formal presentation to management regarding her recommendation changes to the pension program. (Tr. 1145:10-17; PX 10' (with Peck’s notes); PX 632 (with Filey’s notes).) She understood that her assigned task had been to cut costs, not bo make the Plan more beneficial for Participants. (Peck Tr. 1146:24-1147:3.) The task force had looked at several variations of the bash balance formula—and chose the particular formula because of the level of savings it provided and because it was service-based, which was appropriate based on the emerging demographics of the Company. (PX 632; Peck Tr. 1149:6-11.) Peck’s presentation to senior management .reflected that an advantage of converting to a cash balance plan was “decreases [in] future company costs;” a disadvantage was that it would lead to a “permanent loss of retirement benefits.” (PX 632.) The Company viewed announcing a temporary plan freeze as a “morale killer.” (Peck Tr. 1155:16-19, 1164:13-16.) However, Peck agreed that wear-away was, in effect, a freeze. , (Tr. 1160:10-13.) It was not announced as such. Conversion to a cash balance plan had the advantage of being able to obscure what was an effective freeze, without the accompanying negative publicity, loss of morale, and decreased ability to hire and retain workers. (Tr. 1157:16-1158:1,1161:11-23.) On July 20, 1995, a presentation was made to senior management—including Farah and Dale Hilpert, Foot Locker’s Chief Operating Officer at .the time—regarding the proposed changes in the pension program. (PX 101.) The presentation included cost savings expected in large part because of the wear-away effect. (PX 101.) Peck testified, and the Court credits, that senior management was involved throughout the decision making process. (See Peck Tr. 1114:23-1115:25, 1169:3-9, 21-25.) On August 8, 1995, a presentation regarding the proposed changes in the retirement plan was'made to the Company’s Retirement Investment Committee. (PX 19; PX 147.) That presentation, which was made by Barry Thomson, included a comparison of various defined benefit plan alternatives—and contained various benefit illustrations for the version of the cash balance plan that was ultimately selected. (PX'19; Peck-Tr. 1176:7-10.) On August 22, 1995, Peck sent the Board an abbreviated version of the August 8, 1995 presentation (PX 91) in order to enable to Board to review the materials in advance of a meeting scheduled for September 13, 1995. (Peck Tr. 1176:11-15, Tr. 1177:3-9.) On September' 13, 1995, Thomson presented the proposed recommendations to the Board. (PX 37, PX 40.) The Board adopted the recommendations and, two days later, on September 15, 1995, a company-wide announcement letter was issued about the changes to the Plan. (PX 2.) A year later, in September 1996, Peck learned that the wear-away period would be significantly longer than previously expected—and would last between four and five years. • (Peck Tr. 1141:12-17; PX 9.) Prior to this point, both Peck and Kanow-icz believed that wear-away was only expected to last two to three years. (Peck Tr. 1134:23-1135:5; Kanowicz 3/29/2012 Tr. 167:8-18.) On September 11, 1996, Mercer informed Foot Locker that the normal cost (e.g., annual cost to Foot Locker) under the new Plan was about $4 million and was expected to rise to about $10 million by the year 2000, when wear-away would end in about four years. (PX 9; Peck Tr. 1141:22-1142:13.) Mercer’s September 11, 1996 letter referenced wear—away explicitly-and indicated that extending the wear-away period would result “in some additional short term savings.” (PX 9.) This letter was read by executives at the highest level: Farah clearly read the September 11,1996 letter because attached to that letter was Farah’s memo to John Cannon and John Gillespie, dated September 10, 1996 (one day earlier), requesting a meeting with regard to the interest crediting rate on cash account balances. (PX 9; see also PX 113.) ■ Peck informed at least one other senior executive, Barry Thomson, that wear-away was built into the Plan design and that everybody was going to be impacted by it. (Peck Tr, 1142:22-1143:12.) The SPD was not in fact printed and distributed until December 1996, after Foot Locker understood that that wear-away would be prolonged. (PX 59; Peck Tr. 1227:25-1228:14.) In November 1996, Peck made another presentation to senior management entitled “Review of Plan Options for Additional Cost Savings.” (PX 11 (emphasis added).) The presentation referenced that Plan changes had been approved by senior management in July 1995, approved by the Board in September 1995, and implemented in January 1996. (Id.) These changes had resulted in savings of $6 million from 1995 to 1996. (Id.) C. Employee Communications Foot Locker communicated the changes to the retirement plan to employees in a series of communications; All of the communications—whether intended for company-wide dissemination or to individuals or regional groups—share core common characteristics. All failed to describe wear-away. All failed to clearly discuss the reasons for the difference between a Participant’s accrued benefit under, the old Plan and his or her cash balance under the new. The Court finds that all the statements were intentionally false and misleading. The changes in' the pension program were first—and very misleadingly—introduced to Participants in a September 15, 1995 announcement letter from Farah and Hilpert.- (PX 2.) The Company told employees that it was “excited” to announce that, after' “listenfing] to what associates have told us they would like to see,” it had decided to update its pension plan to “give associates a more competitive retirement benefits, package.” (PX 2.) This communication announced, the Plan changes as positive news when Foot Locker management knew that in fact the changes were, at best, a mixed bag: an effective temporary-freeze of- additional benefit accruals (a plain negative) would be accompanied by the introduction of a new 401 (k) plan and the ability to take the pension benefit in a lump sum (two positives). (Peck Tr. 1179:20-25.) In addition, Foot Locker knew that, once out of wear-away, Participants would accrue additional benefits at a lower and slower rate. (Tr. ,1180:23-1181:2.) Peck, who was involved in drafting the September 15, 1995 announcement letter to employees, characterized it as a “good news .letter”—and that bad news was not included. (Tr. 1181:13-1182:9, 1184:16-25.) Peck testified that it was unnecessary to include the bad news because it (the bad news) “didn’t apply to everybody.” (Tr. 1184:23-1185:7.) The evidence was overwhelming, however, that all but a very small number of employees were known to be negatively impacted.by the Plan change. The September 15, 1995 announcement letter to employees states in part as follows: The other part of the new retirement benefit- program provides several changes to The Woolworth Retirement Plan. These changes will provide participants with more flexibility and a better ability to monitor their benefits. Each plan participant will have an individual account, to which the company will make a yearly contribution. That contribution will be based on a new formula that will reflect percent of pay and years of service. Participants will be able to see their individual account balance grow each year, and know its value. (PX 2.) Foot Locker knew at the time that the statement, “Participants will be .able to see their individual account balance grow each year, and know its value,” was false as- to almost all Participants, because the account balance would have no “value” to Participants in wear-away. (Peck Tr. 1182:15-1183:17, 1184:2-4,11:15.) At trial, Peck agreed that Participants would not know the value of their benefit while they were in wear-away unless they were specifically informed that they were in wear-away. (Tr. 1183:18-21.) The next company-wide communication was distributed on November 17, 1995. (PX 4 (the “Highlights Memo”).) Peck had direct involvement in drafting that memo as well. . (Peck Decl. ¶ 16.) She again made an affirmative decision to leave out the negative aspects of the Plan changes. (Peck Tr. 1188:12-18.) Wear-away was not disclosed. (Tr. 1188:22-24.) Foot Locker knew at the time that it was a misleading statement for anyone in-wear-away to state, as the Highlights Memo did, that “At termination of , employment, provided you are vested, you will have the option of taking the lump sum payment equal to your account balance.” (PX 4; Peck . Tr. 1188:25-1189:10, 1213:24-1214:11.) This statement obscured the fact that the accrued benefit was the sole true benefit for anyone in wear-away.. (Of course, Participants had a lump sum versus annuity choice; that portion of the statement was true). The Highlights Memo further referred Participants to forthcoming statements of their estimated benefits. (PX 4 (“A statement showing your estimated benefits under the amended Plan will be mailed to you during December 1995.”)) But as Kanowicz,. who worked on the pension design team, explained- during her deposition, the Company simply “left [the wear-away] part out” of communications with employees. Both Kanowicz and Peck testified that they understood that the account balance increases did not mean anything while Participants were in wear-away. (Kanowicz 3/29/12 Tr. 166:18-167:7; Peck Tr. 1133:6-9). Furthermore, Kanow-icz acknowledged that “if we spelled it out” for the employees, “they would have” understood that their benefits were being frozen. (Kanowicz 3/29/12 Tr. 195:12-16.) There were a number of ways to explain these effects in the numerous communications with employees. But the Company “didn’t spell it out.” (Kanowicz 3/29/12 Tr. 195:18-19.) Instead, Foot Locker knew that under its new Plan announcement, employees would mistakenly “perceive the [growth in] their account [balance] as growth in their benefit,” but it “made sure that nothing was said to people to disabuse them of that idea” that their benefits were growing. (Kanowicz 3/29/12 Tr. 363:19-364:6.) Although Peck stated that her original belief was that the wear-away would be a “short period of time” of two to three years, she agreed that she would want to know if an employer was freezing her pension for that “short” period. (Peck Tr. 1134:23-1135:5, 1136:11-14; 1136:25-1137:5,1138:16-23.) The Summary Plan Description (“SPD”) was distributed in December 1996.. (See PX 5; PX 59; Kiley Tr. 803:24-804:9.) The SPD contains a variety of statements that falsely indicated to Participants that their actual retirement benefits were fully reflected in their account balances—versus the factually correct statement that such benefits would often default to the December 31, 1995 accrued benefit under the “greater of’ formula. The SPD contained á number of intentionally falsé misstatements. The Introduction to the SPD states, “This SPD explains how you qualify for a pension” and “how that pension is determined.” (PX 5 at FLPL0020.) The “Highlights” section contains the following bullet points next to “How Your Retirement Benefit Is Determined”: ■ Account balances are credited ,with 6% interest annually. ■ Compensation credits, arrived at using a formula based on your years of - service and compensation, are added to your account balance annually. (Id. at FLPL0023 (italicization in original).) The Highlights section refers Participants to page 11, which contains the following’information under the heading “How Your Retirement Benefit is Determined”: Your Plan benefit is based on the account balance you accrue, or earn, while a participant. That account balance is made up of: ■ Your initial account balance, which is the value of your Plan benefit as of December 31, 1995, before the Plan was amended; ■ interest credited to your account balance; and ■ additions to your account balance, called compensation credits, which are based on years of service and a percentage of compensation. When your employment terminates, you are entitled to receive payments on a monthly basis (an annuity) or in a lump sum. The annuity payable to you is determined in the following manner. Your account balance is increased by interest credits (as described below) to normal retirement date. The resulting amount is converted to an annuity using factors required by federal law and IRS regulations. The lump sum payable to you is the greater of your account balance or the amount determined by multiplying the annuity payable to you by factors required by federal law and IRS regulations. (Id. at FLPL0030-S1 (italicization in original).) Benefits manager Marion Derham conceded at trial that the “greater of’ language did not disclose wear-away. (Derham Tr. 1431:19-1432:1.) The SPD then contains a subsection entitled “Initial Account Balance.” (PX 5 at FLPL0031.) This subsection contains a lengthy explanation, including complicated calculation concepts, followed by a single sentence that states, ‘Your accrued benefit at the time your employment terminates is the greater of the amount determined under the Plan as amended on January 1, 1996 or your accrued benefit as of December 31, 1995.” (Id. (italicization in original).) The term “accrued benefit”—italicized in the preceding sentence—is separately defined in the “Definition of Terms” section of the SPD as “[a] participant’s accumulated account balance converted to a Single Life Annuity payable at normal retirement age.” (PX 5 at FLPL0024 (italicization in original).) Substituting this definition into the preceding sentence leads to: Your accumulated account balance converted to a Single Life Annuity payable at normal retirement age at the time your employment terminates is the greater of the amount determined under the Plan as amended on January 1,1996 or your accrued benefit as of December 31,1995. Deutsch testified—and the Court agrees— that this sentence is incorrect: it states that a Participant’s account balance, not ultimate benefit, is the greater of the two formulas. (Deutsch Tr. 302:4-12.) Thus, even if a clever Participant carefully read the SPD and cross-referenced the SPD’s provisions with the Definitions section, he or she still would not get a correct statement of the “greater of’ comparison. The term “initial account balance” is also defined in the Definitions section. That definition is as follows: If you were a participant in the Plan on December 31, 1995 and on January 1, 1996, you have an initial account balance. That balance is equal to the actuarial equivalent lump sum value of your accrued benefit (as determined under the terms of the Plan in effect on December 31, 1995) as of December 31, 1995. This value is determined actuarially based upon a 9% rate of interest and the mortality table set forth in IRS rulings. (Id. at FLPL0025.) The SPD contains no further explanation of the meaning of “actuarial equivalent lump sum value” or “the 9% rate of interest.” That phrase is highly technical and not accessible to most reasonably educated people, let alone the average Foot Locker employee, who had a high school level education. It is not immediately apparent to the lay person that the “9%” is being used as a discount rate. The SPD also references “Interest Credits” as part of the calculation of a Participant’s retirement benefits, stating, in pertinent part: Interest credits will help your account balance grow. On the last day of each Plan year, account balances, as of the first day of that Plan year will be credited with interest at the rate of 6% (1/2% per month). (Id. at FLPL0031 (italicization in original).) The SPD fails to mention that this “growth” in the account balance did not represent any growth in the pension benefit for the vast majority of Participants. Peck understood the importance of the SPD in terms of communicating the terms of the Plan amendment accurately to Participants. (Peck Tr. 1240:16-19.) She provided final approval of the SPD. (Tr. 1224:13-15, 1240:20-23, 1241:3-6.) At the time she provided her final approval, Peck knew that wear-away was anticipated to last for an additional three to four years— and that the Company’s prior communications about the changes to the Plan contained statements that were false as to all Participants who were in wear-away. (Tr. 1241:7-20, 1242:1-3.) Nonetheless, Peck did not use the SPD as an opportunity to correct these false • statements. (Tr. 1241:21-25.) Peck testified—and the Court agrees— that the statement in the SPD that ‘Your Plan benefit is based on the account balance you accrue, or earn, while a' participant” was false for Participants in wear-away. (Peck Tr. 1244:12-16.) In fact, the entire SPD was focused on the account balance benefit - (Tr. 1246:3-7) and was irrelevant to Participants in wear-away until they got out of wear-away (Tr. 1245:711, 1247:12-16). Peck knew that, with expected attrition, thousands of employees would terminate and leave the Company without ever getting out of wear-away. (Tr. 1245:15-19.) Nonetheless, wear-away was not disclosed anywhere in the SPD. (Tr. 1242:20-1243:1.) Peck conceded at trial that she had made an affirmative decision to limit the Company’s communications with Participants to “good news”—and not mention that Participants would stop earning additional benefits for a period of time. (Tr. 1243:15-20.) Meanwhile, Peck’s team was aware that it was through the wear-awdy that the cost savings sought by Fa-rah were achieved. (Tr. 1243:25-1244:7.) Peck acknowledged that she did not expect the average Participant to read the entire SPD—and that the average Participant would instead focus on the Highlights section.’ (Tr. 1248:24-1249:2, 1253:4-7.) She also agreed that the Highlights section does not reference wear-away. - (Tr. 1249:8-11.) She agreed that Participants would not be familiar with the concept of wear-away,and would have to be—as she was—educated- about that concept. (Tr. 1250:12-16, 1250:25-1251:10, 1241:15-16.) Peck knew at the time she gave final approval to the SPD that almost everyone was in wear-away and would not be familiar with wear-away—and that she approved statements that were false for them, namely, that their Plan benefit was based on their account balance.' (Tr. 1252:7-13.) Misstatements were made to Participants year after year. (Tr. 1221:17-21, 1222:8-10.) For example, beginning in July 1996, employees received booklets setting forth their individualized “total compensation” statements. (Peck Tr. 1222:11-17; PX 7 at FLPL 3009.) The booklets listed the employee’s Current account balance in dollars, and the booklets after 1996 showed the previous year balance and the growth of that balance via compensation and interest credits. (PX 7 at FLPL 3011; PX 53 at FLPL 3092; PX 54 at FL-OSB 008522; PX 55,-FL-OSB 008529; PX 56, FL-OSB 007545; PX 57 at FL-OSB 008365; PX 58, FLPL0017.) They advised employees, ‘You will want to compare this statement with those you réceive in the future. It is a measure of your yearly progress, and as your time with the company increases, the value of many of your benefits will also increase.” (PX 7 at FLPL 3008; PX 53 at FLPL 3087; PX 54 at- FL-OSB 008519.) The booklets also claimed that “The. cost of your benefits shown in this statement represents a significant portion of your total compensation,” and that “Your Company ... spends a substantial sum of money to ... [provide] financial security for your retirement years.” (PX 7 at FLPL 3009.) -Participants also received individualized annual pension plan statements, which stated that the account balance was the amount, the Participant “could expect to receive upon termination of employment or retirement if you accrue no further benefits and elect a Lump Sum form of payment.” (PX6; see also PX 23.) Peck was involved in drafting these annual statements, which contained two columns-a column entitled “Current, Plan,” listing the estimated accrued benefit through December . 31, 1995; and a column entitled “Amended Plan as of January 1, 1996,” listing the estimated account balance .-as of January 1, 1996. (See PX 43; PX 6; Peek Tr. 1190:25-1191:5.). The “Amended Plan” column did not refer to the December 31, 1995 accrued benefit—or state the Participant would be entitled to the “greater of’ the December 31,1995 accrued benefit and the account balance. (See PX 43; PX 6; Peek Tr. 1192:3-11.) Instead, the “Amended Plan” column stated that the estimated account balance as of January 1, 1996 .was what the Participant “could expect to receive.” (PX 43) Peck knew that this statement was. false for anyone in wear-away. (Peck Tr. 1194:16-23, 1195:16-19, 1215:13-24.) In fact, if a Participant were to have been paid on January 1, 1996, the account balance would not be the payment he or she would receive; he or she would receive the December 31,1995 accrued benefit. (Peck Tr. 1192:15-1193:4.) In many cases, the January 1, 1996 account balance was half of the lump sum value of the December 31, 1995 accrued benefit. . (Peck Tr. 1194:1115.) But like the annual booklets, Plan statements beginning in May 1997 showed annual account growth, reinforcing the message that the-Participant’s account size is equal to his benefit size. See PX 3 at FL-OSB 002244 (‘Tour benefit is expressed as an account balance that grows each year with interest and pay credits.”) • Additional materials sent to some Participants describing the benefits they would receive also did not disclose wear-away. While some Participants—after ..individual inquiry—received additional statements that listed a “lump sum payable figure that was greater than,the “initial account balance” or “accrued benefit” figures, (see, e.g., PX 339, PX 330, PX 390.), the statements did not explain that the differential was due to the fact that the initial account balance was not a meaningful figure that led to increased benefits over time. In fact, some statements showed the account balances increasing over time. (See, e.g., PX 330.) Foot Locker has asserted that its communications with Participants were- consistent with legal advice it was .provided. However, the evidence does not support that counsel—inside -or outside—had the full array of facts, including those facts necessary to provide a clear understanding of the number of Participants impacted by wear-away. (See Peck. Tr. 1278:17-24.) Peck also did not ensure that outside counsel knew -that wear-away could continue for a period of years. (Tr. 1277:22-1278:1, 1279:20-1280:6.) Finally, outside counsel had advised that the annual statements be revised to. include the qualifier, “unless your accrued benefit as of December 31, 1995 (set forth in 5, above) is greater, on an actuarial equivalent basis.” (PX 44.) Inside counsel, however, made no comments on the draft. (PX 625 (“No comments per Sheilagh Clarke,” inside counsel).) Peck approved the statement’s dissemination without change. (Peck Tr. 1220:8-11.) A follow-up. statement went out in March 1996. (Tr. 1220:20-23.) ' Foot Locker has also argued that the Plan changes provided certain benefits to employees—including the ability to receive retirement benefits in a lump sum and a-401(k) plan. This is supported by the evidence but' ultimately irrelevant. The lump sum option could have been provided without any conversion to a cash balance plan, let alone to a cash balance plan that had mathematically locked-in wear-away' (Déutsch Tr. 124:17-125:7;' see also id. 145:1-146:21.) Additionally, the rollout of the 401(k) cannot make up for the absence of clear communications as to what an employee’s actual retirement benefit would be, or the fact and impact of wear-away!on that benefit’s growth. D. Employee Reaction to Plan Communications Perhaps the clearest indication that wear-away was not understood was the fact that not„a single employee ever complained about it, This absence of complaint was the logical result of Foot Locker’s false and misleading -communications: employees simply did not know that wear-away was an issue for them. At the time of the events in this case, the average Foot Locker employee earned an average of $22,000. (Peck Tr. 1135:14-15.) To communicate effectively with employees, Foot Locker’s benefits employees had an assumption that employees had an eighth-grade level of education. (Ine Tr. 983:19-23.) Ada Cardona, a class member who testified credibly at trial, is an example of an average employee. She worked, for the company for a total of 40 years. (Cardona Tr. 429:17-18.) On the date that, she retired, that is, after 40 years, she was earning $9.80 per hour. (Tr. 430:21-22.) Cardona reviewed the communications relating to the Plan changes sent to her. (Declaration of Ada Cardona (“Cardona Decl.”) ¶ 5, ECF No. 325; Tr. 433:4-11.) She focused on the fact that the communications indicated that the pension plan would continue; she testified about the announcement letter, “I read it and I just thought the pension was still there, and that was it, you know?” (Tr. 433:10-11.) After reviewing the communications, she had no understanding as to what “conversion” the Highlights Memo (PX 4) referred, and did not understand that .she would not be receiving additional growth in her pension benefits. (Cardona Decl. ¶ 12, Tr. 435:1-5.). Ralph Campuzano, who worked-at Woolworth until 1998, also testified credibly at trial. . He testified'that he read all of the Plan communications sent to him. (Declaration of Ralph Campuzano (“Campuzano Decl.”) ¶ 5, ECF No. 328.) He read the Highlights Memo (PX 4) and believed that it indicated that his pension benefits would continue to grow. (Campuzano Decl. ¶ 9.) He would regularly receive Plan summaries and carefully saved them in his files. (PX 53, PX 61, :PX 356.) Unbeknownst to him, they were in fact irrelevant to the pension benefit he actually stood to receive. Between 1996 and his termination, he was neyer out of wear-away. . Doris Albright was also very credible. She worked at Woolworth between 1974 and 1996, and left only when the facility at which she -worked was closed down. (Declaration of Doris Albright (“Albright Decl”) ¶ 1, ECF No. 329.) During the last two years of her employment, she was the administrative manager at the facility. In that capacity, she regularly interacted with employees at the facility regarding benefits issues. (Albright Decl. ¶¶2, 16, Tr. 964:24-965:13.) She did not understand wear-away or that her pension benefits had not grown after the Plan change went into effect. (Albright Decl. ¶ 4; Tr. 969:20-23, 970:2-4, 9-16.) Richard Schaeffer is another class member who testified credibly at trial. He worked at Woolworth between 1975 and 1997, when the facility at which he worked was closed down. (Declaration of Richard Schaeffer (“Schaeffer Deck”) ¶ 1, ECF No. 326.) Schaeffer worked first as a forklift driver, then as a forklift supervisor, and finally as a rebuyer. (Id.) Based on the communications he received and reviewed about the changes to the Plan, Schaeffer believed that the old Plan formula was no longer relevant, that his benefit was now his account balance, and that this benefit would keep growing as he continued working for the Company. (Id. ¶¶ 6, 7; Schaef-fer Tr. 1085:19-23.) In 1997, Schaeffer contacted Foot Locker regarding his and his- wife’s pension benefit because he wanted to know the figure that he would be receiving, when he and his wife would be let go. (Schaeffer Decl. ¶ 8; Schaeffer Tr. 1084:6-1085:10.) The evidence demonstrated that he intended to and did rely on the information Foot Locker provided. In reviewing the response he received from Foqt Locker, Schaeffer focused on the bottom line figure and did not fully understand the accompanying calculations. (PX 390; Schaeffer Decl. ¶ 9; Schaeffer Tr. 1089:12-20.) He did not understand from the letter and the calculations that his pension benefit had not been growing during 1996 and 1997. (Schaeffer Decl. ¶ 9; Schaeffer Tr. 1090:6-14.) Russell Howard also testified credibly on behalf of the Class. Howard worked for Foot Locker between 1967 and 2003. (Declaration of Russell Howard (“Howard Decl.”) ¶ 1, ECF No. 327.) Howard testified that he received and read through all of the communications about the Plan changes, skimming certain parts. (Howard Decl. ¶4; Howard Tr. 449:15-450:1, 452:13-18.) Like his fellow class members, Howard believed, based on the communications he received, that his pension benefit was growing the entire time he worked for the Company. (Howard Decl. ¶ 3.) His understanding was that his opening account balance reflected the full value of the benefit he had earned through December 31, 1995—and that this benefit would continue to grow with continued employment. (Id.) Howard testified credibly that he never suspected that his pension benefit had stopped growing while he worked for the Company: “I just looked at the growth year to year, saw that it was growing and that was it, yeah.” (Howard Tr. 456:3-5.) In fact, his benefit was not growing. Michael Steven, the former Chief Financial Officer of the Woolworth division— who holds a Master of Business Administration (“MBA”) in Finance and is a licensed Certified Public Accountant (“CPA”)—also testified on behalf of the Class. (Declaration of Michael T. Steven (“Steven Decl.”) ¶¶1-2, ECF No. 340.) He credibly testified that, based on company communications, he believed that his prior benefit was placed into—or somehow became—the basis for his cash balance account. (Steven Decl. ¶ 7; Steven Tr. 1367:1-3.) While he understood that there was an actuarial conversion process, he did not understand that the conversion resulted in a lower amount than that to which he was entitled as of December 31, 1995. (Steven Decl. ¶ 7; Steven Tr. 1367:13-20.) When he learned that there would be Plan changes, he asked Foot Locker to prepare an estimate of, as he characterized it, what his “wealth was worth.” (Steven Tr. 1368:15-17.) In response to that request, he received a statement from Kiley dated January 19, 1996. (Steven Decl. ¶ 15; PX 329.) Comparing the estimated lump sum benefit in this statement to his opening account balance, Steven learned that the lump sum benefit was larger—but he assumed that the difference was due to various actuarial calculations. (Steven Decl. ¶ 15;; Tr. 1369:20-1370:7.) His ' understanding from the estimate was that his pension would continue to increase with additional service. (Id.) In fact, it did not. The evidence established that Steven intended to and did rely on this information. Steven made a second request later in 1996—and received another response from Kiley. (Steven Decl, ¶ 16; PX330.)- Even putting these two communications regarding his pension benefit together and seeing the differences between them did not reveal to him that he had not earned additional benefits during the intervening period of employment. (Steven Decl. ¶ 18.) For instance, when he saw the calculation of his initial account balance, he did not understand that the “9%” shown in the calculation had been used as a discount rate. (Steven Decl. ¶ 17; Tr. 1373:25-1374:4, 22-23.) At trial, counsel for Foot Locker walked Steven through the calculations provided to him—clearly with the view of demonstrating that he had all of the information that he needed before him to understand wear-away. This line of examination did not assist Foot Locker. Steven very credibly agreed to that with which he could agree, and very credibly indicated a lack of real understanding as to what the calculation showed. • Named plaintiff Geoffrey Osberg has spent over eight years litigating this case on behalf of the Class. He was a sales associate at Foot Locker and rose to the level of store manager; he is now a sales associate at a department store in Illinois. (Declaration of Geoffrey Osberg (“Osberg Decl”) ¶¶ 2-3, EOF No. 331.) His former colleagues at Foot Locker have been represented by him in this case. He testified credibly at trial that while he reviewed the Plan communications, he did not understand that his pension benefit was not growing with additional years of service. (Osberg Decl. ¶¶ 6-8; Tr. 418:12-25.) He recalléd having received the initial communication in'the fall of 1995 from Farah and Hilpert announcing the coming changes to the Plan. (Osberg Decl. ¶ 10.) He testified credibly that he recalled'taking away from the letter that he should be “excited” about the changes and that they were positive changes for employees. (Id.) The' evidence at trial overwhelmingly supports that the Company intended Participants to rely on Plan communications, that they did, and that the communications failed to inform them of wear-away. Indeed,- those communications were designed to conceal that information. Named plaintiff Osberg and class members Cardona, Schaeffer, Steven, Howard, Campuzano, and Albright all testified credibly that despite receiving the company communications, they did not understand that they had ceased to earn additional pension benefits despite continued employment. From the CFO of.Woolworth stores to a cashier, no one understood what was going on. , But there is even more evidence of the misleading nature of the communications than this. Even employees directly involved in pension benefits calculations did not understand the concept of wear-away—or that their accruals were effectively frozen for a period of time after the Plan conversion. Ellen Glickfield testified on behalf of the Class. One of her job responsibilities in her 14-year employment as . a pension clerk at Foot Locker was to calculate pension benefits, including after the January 1, 1996 Plan amendment. (Declaration of Ellen Glickfield (“Glickfield Deck”) ¶¶3-4, EOF No. 351.) She believed that her December 31,1995 accrued benefit became an opening cash account balance. (Glick-field Deck ¶ 15.) Even, when she received a larger minimum lump sum (“MLS”) than the cash balance, she did not understand what had occurred. When. she noticed that the MLS was larger than her cash balance, account, she attributed the difference to governmental regulations:- “The MLS was just a possible extra amount that someone might get, even more than his or her account, because of a calculation the IRS required at the time of payment depending on interest rates.”' (Id. at ¶ 19; see also Glickfield Tr. 1400:5-23, 1402:4-8.) Similarly, HR Department employee Sherry Flesses; who testified by deposition, thought she was “earning more pension benefits” and “had no idea that there was a freeze of [her] earning any pension benefit at the time”; she conceded that she would be “surprised” to learn that she had earned no new benefits. (Flesses 3/20/12 Tr. 127:17-128:3, 157:18-158:3.) Ms. Flesses “understood that you always were starting out with what you already earned,' and then moving forward, you earned more.” (Flesses 3/20/12 Tr. 154:18-22.) Ms. Flesses further testified that she “did not, in [her] wildest dreams, have any suspicion that Woolworth was creating opening account balances that were not of equal value to what somebody would have received the next day.” (Flesses 3/20/12 Tr. 119:2-6.) E; Fiduciary Responsibilities The plan administrator is an ERISA fiduciary. See, e.g., Ladouceur v. Credit Lyonnais, 584 F.3d 510, 512 (2d Cir.2009). Foot Locker was the plan administrator for the Foot Locker Retirement Plan. Nonetheless, the Company operated on the principle of caveat' emptor with regard to PMn communications. (Peck Tr. 1290:1321.) Peck testified that she was a fiduciary of the Company. (Tr. 1280:10-14.) However, she had a poor understanding of her fiduciary duties. She testified that her responsibility included ensuring that funds were not misused; she did not express any understanding that she had a separate fiduciary duty as the plan administrator— though she conceded she was a plan administrator. (Tr. 1280:16-1281:4, 1282:2-4.) She testified that she did not consider either herself or the Company a fiduciary to the Participants when drafting and issuing communications relating to the Plan changes. (Tr. 1282:19-1283:4.) Woolworth’s CEO at the time of the plan change, Roger Farah, testified live at trial. He was clearly annoyed at having to be present' at the trial and was short tempered and’ resistant. Remarkably for a man in his position, he denied understanding what a fiduciary’s obligations are and that he was a fiduciary with respect to Plan Participants. (Farah Tr. 539:14-20, 543:2-16.) F. The Expert Witnesses 1. Deutsch Deutsch is a very knowledgeable actuary. He testified as to a number of different topics—and the Court found his testimony highly credible in every respect. Deutsch testified that “actuarial equivalent lump sum value” of a future payment is the amount which, when increased at an assumed rate of interest to the date of the future payment, equals the amount of the future . payment. (Deutsch Tr. 120:16-121:2; see also Deutsch Op. Report at 2-3.) Deutsch opined—and the Court credits—the “actuarial equivalent lump sum value” of the December 31, 1995 accrued benefit could be reasonably calculated by using one of two alternative assumptions about the lump sum: (1) that the lump sum would be immediately cashed out and invested by the Participant at the 417(e) interest rate (6.06% at the time of the conversion), or (2) that the lump sum would remain in the Plan in the form of a Participant’s opening account balance and be “invested” under the terms of the Plan (at a fixed 6% rate). (Deutsch Op. Report at 2-3; Tr. 180:19-181:20.) Foot Locker’s use of a 9% discount rate and a further mortality discount resulted in opening account balances that were not actuarially equivalent to the December 31, 1995 accrued benefit. (Deutsch Op. Report at 3; Tr. 153:2-25, 179:4-180:8, 184:6-25.) At trial, Kiley agreed that the use-of a 9% discount rate did not result in a value that was actuarially equivalent to the December 31,1995 accrued benefit. (Kiley Tr. 629:2-3, 629:7-15.) Accordingly, this testimony supports the Court’s determination that Plan communications referring to a conversion to an actuarial equivalent lump sum were false and misleading. With regard to mortality, Deutsch testified that any mortality discount used in calculating opening account balances needed to be accompanied by corresponding “survivorship” credits to the account over time—which was not done here. (Deutsch Tr. 183:12-184:2.) Deutsch testified that a company’s contribution to fund a pension plan generally consists of- two parts: (1) the unfunded liability, which is the difference between the already earned liability and the assets, and (2) the annual normal cost. (Deutsch Tr. 132:16-133:25.) pnder the unit credit funding -method—which was used by the Plan both pre—and post-amendment—the unfunded liability is set as the value of the pension benefits earned to date, and the normal cost is set as the value of benefits earned during the year. (Deutsch Tr. 132:25-133:5; see also Sher Tr. 1459:3-10.) While unfunded liability is fixed and cannot be reduced, savings can be achieved in the normal cost by reducing future accrual of benefits.- (Deutsch Tr. 133:6-11; Sher Tr. 1459:11-25; see also PX 9.) Foot Locker did just that by choosing a conversion rate of 9%—'which automatically'resulted in.a temporary suspension of future accruals for almost all employees. Deutsch disagreed with Foot Locker’s position that, under the new Plan, an employee only earned the right to a lump sum at the point that- it was paid; ‘according to Deutsch,- every employee possessed the-right to a lump sum on and after January 1, 1996, when the Plan was amended, even though the exact amount of that lump sum would not become known until it was paid. (Deutsch Tr. 161:13-163:18.) The Court agrees. Deutsch testified that wear-away is, factually and by definition, equivalent to a temporary freeze. (Peutsch Tr. 169:6-12, 174:3-13.) Deutsch analyzed wear-away both in terms of “annuity” wear-away (analyzed by comparing -the opening account balance and the 'December 31, -1995 accrued benefit on an annuity-to-annuity basis) and in terms of “lump sum” wear-away (analyzed by performing á lump sum-to-lump sum comparison). According to Deutsche all Participants,' even those who received the enhancement, experienced annuity wear-away. (Deutsch Op. Report at 12, 15.) With respect to lump sum wear-away, Deutsch acknowledged that there were a few- people (only 223 out of many thousands) whose initial account balances were larger than the lump sum value of their December 31, 1995 frozen accrued benefit. (Deutsch Op. Report at 16; Tr. 196:4-25.) For the remaining 98.6% of Participants, however, the lump sum-value of the December 31, 1995 frozen accrued benefit, as of January 1, 1996, exceeded the initial account balance by some amount. (Deutsch Op. Report at 16.) 2. Sher Sher is also a knowledgeable actuary. He is plainly a qualified expert in pension plan design. The Court found his testimony helpful. Ultimately, however, his testimony clarified rather than undercut the Class’s positions. 'That was ultimately due to the fact that the rationale for plan conversion—a topic on which Sher was articulate and clear—is ultimately irrelevant to the question of whether once the Plan was amended (for whatever reason), the Company fulfilled its fiduciary responsibilities to Participants and appropriately communicated the changes to them. . Sher conceded that' there are a variety of ways in which cash balance plans can be designed. (Sher Tr. 1460:4-5.) The design can be adjusted to achieve whatever level of cost savings a company seeks to achieve—including none at all. (Tr. 1463:6-24.) Sher further agreed that wear-away is not a necessary part of the design of a cash balance plan (Tr. 1460:1-3), but that wear-away was. expected for some, period of time in connection with the design for the Foot Locker Retirement Plan. (Tr. 1459:11-21.) Sher’s analysis estimated that, at the time of conversion, a two—to three-year period of wear—away was expected for most Participants. (Tr. 1578:25-1579:19.) Sher testified that “actuarial equivalence” is a conversion of a pension benefit from one form to another using actuarial factors—and that this conversion- should be cost-neutral from the perspective of the Plan. (Sher Tr. 1571:2-1573:1.) He testified that the 'January 1, 1996 Plan conversion had dual aspects from a cost perspective. On the one hand, wear-away resulted in normal cost savings: the normal costs for employees in wear-away would be zero until they got out of wear-away; ongoing normal costs were only attributable to the relatively small segment not in wear-away. (Tr. 1457:8-14, 1496:11-1497:1, 1500:4-12.) Normal cost savings from anticipated from wear-away directly reduced the Company’s out-of-pocket costs. (Tr. 1712:25-1713:8.) These amounts flowed through to the minimum required contribution. (Id) In other words, the anticipated wear-away resulted in an immediate bottom line cash savings to Foot Locker through normal cost reductions. (Tr. 1713:14-18.) On the other hand, Sher testified that Participants’ overwhelming seléction of the lump sum option after January 1, 1996 resulted in certain increased costs. (Tr. 1457:15-1458:1, ’ 1465:20-1466:13.) However, Sher agreed that these costs were to the Plan because the lump sums were paid out of the existing Plan assets (which were sufficient to cover them); the Company itself did not have to pay those amounts out of corporate cash flows. (Tr. 1468:3-18.) Moreover, the Company incurred savings through lower payroll costs as employees terminated and elected lump sum payments. (Tr. 1479:8-1480:15, 1493:24-1494:8.) On cross-examination, Sher agreed that the Company did not have to increase the amount of cash that it put into the Plan in 1996 to pay for the costs of lump sum distributions. (Tr. 1716:15-19.) At that time, the Company’s assumption was that 100% of Participants would take an annuity.. (Tr. 1716:21-1717:1.) As a result of this assumption, the Company—which was contributing at minimum funding—incurred no cost as-to Participants in wear-away. (Tr. 1717:19-1718:1.) On a pre-funding basis, so long as the Company assumed that no one would elect a lump sum, the Company did not need to fund the cost of a lump sum. (Tr. 1718:25.) As a result, in the short term, the Compan