SAN FRANCISCO The 9th U.S. Circuit Court of Appeals on Aug. 20 affirmed dismissal of age-discrimination allegations against the cash balance plan of Southern California Gas Co., Los Angeles.
The ruling in Hurlic vs. Southern California Gas Co., also rejected a Feb. 1 ruling by the IRS that said use of greater-of provisions in cash balance conversions could violate ERISA's anti-backloading provisions.
Greater-of provisions essentially allow employers to give employees nearing retirement the greater benefit derived under a previous defined benefit plan vs. benefits in the new cash balance formula. The prohibitions are aimed at preventing employers from backloading benefits in later years of employment.
Mark Ugoretz, ERISA Industry Committee president, hailed the decision in a news release. ERIC has long argued that the IRS' interpretation (on the use of greater-of provisions) was inconsistent with the statute and called into question many long-established plan designs that benefit plan participants by providing a benefit that is the greater of two formulas, he said. The 9th Circuit wisely rejected the IRS' interpretation as flawed.
We're pleased that the dismissal against our cash balance conversion was upheld by the court, said Christy Heiser, a spokeswoman for Southern California Gas.
Southern California Gas is a subsidiary of Sempra Energy, San Diego. Sempra has $2.9 billion in defined benefit assets and total retirement assets of $5.3 billion.