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Cash Balance Pension Plans Not Discriminatory: Supremes Deny Appeal

The Supreme Court just denied leave to appeal in a case filed by IBM employees who alleged that the company committed age discrimination when it altered its pension plan. The lawsuit asked for $1.4 billion. Former IBM employee Kathi Cooper was lead plaintiff in a class action suit brought on behalf of 250,000 current and former workers. The suit alleged that IBM's "cash balance" plan was discriminatory because it allowed younger workers to accrue benefits faster than older workers.

IBM switched to a cash balance plan in 1999. Cash balance plans provide individual accounts that can be cashed out when a worker leaves the company. This appeals to younger workers, who are more mobile. About 1,500 companies have adopted cash-balance plans.

The 7th Circuit had ruled that IBM's plan was age-neutral.

Last year, Congress passed legislation that clarified that cash-balance plans complied with the age discrimination provisions of ERISA, the Employee Retirement Income Security Act. Cooper's lawyers argued that the legislation applied only to future cash-balance plans.

The case is Cooper v. IBM, 06-760.

[Earlier coverage here, here, here, etc.]



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.