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Article: 3rd Circuit Court rules cash balance plan doesn't discriminate based on age
- Article from:
- Lawyers USA
- Article date:
- February 12, 2007
- Author:
CopyrightCopyright 2007 Lawyers USA. Provided by ProQuest LLC. (Hide copyright information)
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A company's cash balance pension plan does not violate ERISA's
prohibition on age discrimination, the 3rd Circuit has ruled.
A group of former and current employees sued their employer when
it converted its pension plan from a traditional defined benefit plan
to a cash balance plan.
Cash balance plans, in which employers guarantee participants a
retirement benefit premised on a hypothetical account that contains
employer contributions and interest credit earnings, are legal. But
here the employees alleged that the plan violated ERISA's anti-
discrimination provision, 29 U.S.C. Sect. 1054(b)(1)(H)(i), which
prohibits plans where "the rate of an employee's benefit accrual is
reduced, because ...