Latest cash balance ruling bad news for existing plans
Employee Benefit News, March, 2007 by Lynn Gresham
In a setback for employers, a U.S. district court judge ruled that Citigroup's cash balance plan discriminates against older workers. The decision goes against last year's finding by the 7th U.S. Circuit Court of Appeals that IBM's cash balance plan is not age-discriminatory and sets the stage for new lawsuits against hybrid plans.
Judge Shira Scheindlin of the U.S. District Court for the Southern District of New York issued a summary judgment Dec. 12 in favor of Citigroup employees who maintained that Citigroup's "Citibuilder" cash balance plan, implemented in January, 2000, is illegal on several counts. The judge agreed with the plaintiffs' arguments that:
* The plan's accrual formula does not meet minimum standards of ERISA and results in impermissible...
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