Uh-oh! Lock the doors! Bar the windows! The lawyers have discovered pension plans -- cash balance plans in particular, and they spy a pot of gold (for themselves particularly).
One lawyer told Pensions & Investments that in his view, "every single cash balance plan . . . violates the age-discrimination law."
Sounds like he's trying either to build a class-action case, or scare companies into settling threatened litigation.
How can a cash balance plan be discriminatory when every employee receives a benefit that is based on career-average pay and years of service? That is, each employee is treated exactly like every other employee, regardless of age.
That is not the case in final-pay defined benefit plans, where the benefit is deliberately skewed toward older, longer-service employees. Those plans really are discriminatory.
If there is a problem with some cash balance plans, it is in the transition from a final-pay defined benefit plan to a cash balance plan.
Some midcareer employees might receive smaller pensions from the cash balance plan than they might have from the previous plan, if they stay with the company until retirement.
These employees still will receive the full value of the benefits they had accrued before the change to a cash balance plan.
It is only the projected benefits, benefits they have not yet earned, that might be lower.
Of course, that won't stop some lawyers trying to make a killing.