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High Court Won’t Review Cash-Balance Pension Ruling

October 8, 2008
Related Topics: Miscellaneous Legal Issues, Retirement/Pensions, Latest News

The U.S. Supreme Court on Monday, October 6, declined to review a 2007 federal appeals court ruling that cash-balance pension plans do not discriminate against older employees.

Without comment, the justices let stand an August 2007 ruling by the 6th U.S. Circuit Court of Appeals that a cash-balance plan sponsored by printing firm World Press Inc. is not age-discriminatory. World Color Press later merged with another company to become Quebecor World Inc., which is based in Montreal.

At the time of its ruling, the appeals court noted that participants in cash-balance plans received the same benefit and interest rate credits.

Because neither the contribution rate nor the interest rate changed with age, “plaintiffs have failed to show that the World Color Press Plan was age-discriminatory,” according to the appeals court ruling.

The denial of cert in the World Color Press case is the second time the high court has declined to review a lower court ruling in a cash-balance plan age-discrimination case. The first time was in January 2007 when the Supreme Court—in a highly publicized case—declined to review a 7th U.S. Circuit Court of Appeals decision that IBM Corp.’s cash-balance plan did not discriminate against older employees.

In all, five appeals courts—including the 6th and the 7th—have taken up cash-balance plan age-discrimination cases, and all five courts have ruled that the plans are not age-discriminatory.

With unanimity at the appeals court level on the age-discrimination issue, legal experts say it is not surprising that the Supreme Court has declined to intervene.

A 2006 federal law protects cash-balance plans that meet certain basic standards from age-discrimination suits. But that law, the Pension Protection Act, applies only to cash-balance plans established after June 29, 2005.

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail Management’s online news feed is now available via Twitter.

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