Former Georgia-Pacific employees on Aug. 11 received a favorable ruling in their class-action lawsuit over the companys cash balance plan that could cost the company up to $20 million in pension benefits. The 11th U.S. Circuit Court of Appeals in Atlanta overturned a lower courts decision that invalidated Treasury Department regulations dictating that employers cannot issue lump-sum payouts valued at less than the present value of pension benefits at retirement age.
The appeals court decision requires Georgia-Pacific, Atlanta, to calculate lump sum benefits by projecting participants hypothetical account balances to age 65, and then discounting back that amount using a stipulated interest rate to arrive at the present value of the retirement benefits. We are convinced that those Treasury regulations are valid and control the calculation of consensual lump sum payments, the court ruled.
Gregory Braden, a lawyer in the Atlanta office of Alston & Bird who represents Georgia Pacific, was in arbitration and could not be reached for comment.