The ERISA Industry Committee is calling for the immediate withdrawal of a Labor Department inspector generals report on lump-sum distributions from cash balance plans. In a letter to Labor Secretary Elaine Chao and Treasury Secretary Paul H. ONeill, the association said the report creates an "erroneous impression that cash balance plans do not pay out all that participants who take lump-sum distributions are owed.
The association, which represents many of the nations largest corporate plan sponsors, called the report "flawed and based on an illegitimate and ill-conceived legal theory. The group also seeks the removal of guidance issued by the Treasury Department in 1996 requiring employers to base lump-sum calculations on the present value of pensions at retirement age, instead of simply distributing the amount in their hypothetical cash balance accounts.
"The OIG report is plain wrong, Mark J. Ugoretz, association president. His letter said the report "propounds the whipsaw theory as established law, even though (it) violates established law and fundamentally alters the benefit promised by a cash balance plan.
The inspector generals report is based on audits of 60 cash balance plans.