Judge Says Cash Balance Plans Not Age Discriminatory
Judge E. Richard Webber of the U. S. District Court of the Eastern District of Missouri last week dismissed age discrimination charges against U.S. Bancorp of Minneapolis, noting that the benefit and interest credits provided to plan participants did not discriminate on the basis of age.
Judge Webber rejected plaintiffs’ argument that the plans are age discriminatory because the same benefit provided to an older employee as a younger employee will result in a smaller retirement annuity to an older employee.
That result, Judge Webber ruled, is not because of age discrimination, but occurs because of the "time value of money, a characteristic correlated with age, but not age itself."
The ruling is the first since a second circuit court-the 3rd U.S. Circuit Court of Appeals-ruled last month that the plans are not age discriminatory. The 7th U.S. Circuit Court of Appeals, in a widely publicized decision, ruled last year that cash balance plans in general and IBM Corp.’s in particular, are not age discriminatory.
Of the seven lower court rulings since the IBM decision, five have rejected age discrimination charges, while two courts have said the plans violate age discrimination law.
Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail firstname.lastname@example.org.