CHICAGO — IBM's cash balance plan did not discriminate against older workers, according to a decision today by the 7th Circuit Court of Appeals in Chicago. The ruling reverses a 2003 federal district court decision that the terms of IBM's cash balance pension plan were not age-neutral.
"Removing a feature that gave extra benefits to the old differs from discriminating against them," the appeals court panel said.
In a statement, James A. Klein, president of the American Benefits Council, Washington, said the appeals court decision — along with the cash balance provision in the wide-ranging pension reform legislation that awaits President Bush's signature — "should settle this matter once and for all: cash balance and other hybrid plans are — and always have been — perfectly legal and not age discriminatory."
The pension reform legislation protects new cash-balance plans from age-discrimination suits.
The discrimination ruling by U.S. District Court in East St. Louis, Ill., on July 31, 2003, spurred Armonk, N.Y.-based IBM to freeze its $48 billion cash balance plan early last year. IBM had agreed to pay up to $1.4 billion to the plaintiffs if it didn't win the case on appeal.