New York, September 2, 2025 — In a decisive move to resolve a longstanding legal dispute, Colgate-Palmolive Co. has reached a $332 million preliminary settlement in a class-action lawsuit concerning pension miscalculations. The settlement, filed late Friday in Manhattan federal court, awaits judicial approval. It addresses systemic issues tied to the company’s switch to a cash balance pension structure decades ago.
Background: A Pension Dispute Rooted in Structural Change
This litigation traces its origins to 1989, when Colgate converted its traditional defined benefit pension plan into a cash balance plan—a hybrid structure that offers participants lump sum payouts rather than annuities. Later, in 2005, the company attempted to rectify potential shortfalls by introducing annuity payments to those who had taken lump sums but may not have received the full value of their benefits. Despite these corrective efforts, plaintiffs contended that the recalculated values remained faulty and incomplete.
Litigation Timeline
- 2007: Legal action began against Colgate’s pension methodology.
- 2016: Plaintiffs filed a specific lawsuit, asserting miscalculations persisted despite amendments.
- 2025: The parties agreed to a settlement, culminating in the announcement on September 2.
Settlement Details & Financial Impact
- The settlement covers 1,177 employees, who will share in the remediation.
- Of the $332 million, approximately $232.7 million will be distributed to employees after legal fees and related expenses are deducted.
- Colgate has already provisioned funds for this settlement, notably in the first quarters of 2023 and 2025, reflecting careful financial planning and accrual.
Company’s Position
Colgate-Palmolive officially denied any wrongdoing, emphasizing that the decision to settle was rooted in a desire to minimize further legal risks and uncertainties—not an admission of fault.
Case Identification & Broader Context
- Case title: McCutcheon et al v. Colgate-Palmolive Co et al
- Court: U.S. District Court for the Southern District of New York
- Case number: No. 16-04170
Known for brands such as Hill’s Pet Nutrition, Irish Spring, Speed Stick, Lady Speed Stick, and Tom’s of Maine, Colgate-Palmolive is one of the leading global consumer goods companies.
Implications & Significance
For Employees
Affected employees stand to receive meaningful compensation for pension discrepancies. The payment process and timeline will be determined following judicial review.
For Corporations & Governance
This settlement serves as a cautionary tale: even retrospective fixes may not fully alleviate liabilities unless applied with precise accuracy. It underscores the imperative of rigorous actuarial review and transparency when modifying benefit structures.
For Legal Precedent
The protracted nature of this case—from 1989 amendments to 2025 settlement—illustrates the sustained ramifications of pension administration errors. It also demonstrates how courts may resolve disputes best through negotiated settlements when liabilities remain contested.
Summary: What to Watch
| Key Element | Summary |
|---|---|
| Settlement Amount | $332 million agreed; ~$232.7 million expected to go to employees |
| Affected Group | 1,177 employees |
| Origin of Dispute | Cash balance conversion (1989) and inadequate recalculation of benefits (2005) |
| Litigation Span | Began 2007, lawsuit filed in 2016, settled in 2025 |
| Reason for Settlement | To avoid prolonged litigation costs and uncertainty |
| Funding Strategy | Reserves set aside in early 2023 and 2025 |
| Case & Court | McCutcheon et al v. Colgate-Palmolive Co et al; U.S. District Court, SDNY (No. 16-04170) |
JDJournal Insight
Colgate-Palmolive’s approach exemplifies corporate pragmatism: instead of contesting legal ambiguity—possibly with prolonged financial and reputational costs—it opted for resolution. For HR leaders, benefits managers, and legal professionals, this case emphasizes the critical importance of:
- Conducting precise calculations and audits when altering pension structures.
- Maintaining contingency reserves for potential legal exposures.
- Prioritizing early and accurate communication with stakeholders to avoid protracted disputes.
Should the court approve the settlement, this case will conclude nearly four decades of uncertainty for employees and the company alike.
JDJournal will continue to monitor the judicial approval process and provide updates on disbursement timelines and any further implications for corporate pension governance.
