You can access a copy of the the recent case of Richards v. FleetBoston Financial Corp here [pdf]. A federal district court in Connecticut has opined in that case that an employee could continue with a claim that the company's cash balance plan violates the age discrimination prohibitions under ERISA.
(Comment: The old adage that "you can't fit a round peg in a square hole" seems to apply here. Congress needs to fix this sooner rather than later. You can read about how things are going with pension legislation here.
I liked what House Education and the Workforce Committee Chairman Howard P. "Buck" McKeon (R-Calif.) had to say about hybrid plans on the floor of the House in early April:
"[H]ybrid pension plans represent an important component of worker retirement security. In fact, more than 9 million workers today rely on these benefits for a safe retirement. Unfortunately, some continue to paint a misleading picture about these pension plans. . .Not only are hybrid plans especially advantageous for women and lower-paid workers, but they also comprise the only part of the defined benefit system that is growing. Hybrid plans now provide the PBGC with approximately 25 percent of its premium income. And because the total number of defined benefit plans has declined significantly over the last 20 years, it is now more important than ever to encourage employers to stay in the defined benefit system and offer these benefits. . . )
For those who can't wait to read it, I am posting a copy of the Memorandum issued by the court in the Sandra Register vs. PNC Financial Services Group Inc. case. The decision, which addresses the issues involved in cash balance plan conversions, was rendered on November 21, 2005 by the Federal District Court for the Eastern District of Pennsylvania. The court granted the defendants' motion to dismiss. PlanSponsor.com has a summary of the case here: "Cash Balance Plan Foes Lose in PA Federal Court."
I received a copy of the Order (access it here [pdf]) denying the defendants' motion to dismiss in the cash balance plan litigation involving the Gannett Retirement Plan. The Order is too sparse in its analysis to provide any meaningful discussion here other than to say that the opinion seems to disagree with Eaton v. Onan Corp., 117 F. Supp. 2d 812, 817 (S.D. Ind. 2000) and Tootle v. ARINC, Inc., et al. (discussed here) on whether 29 U.S.C. section 1054(b)(1)(H) applies to employees who have not yet reached normal retirement age. That provision prohibits the reduction of the rate of a participant's benefit accrual because of age and reads as follows:
. . .[A] defined benefit plan shall be treated as not satisfying the requirements of this paragraph if, under the plan, an employee's benefit accrual is ceased, or the rate of an employee's benefit accrual is reduced, because of the attainment of any age.
Read more about cash balance plan litigation and legislative developments at this link here.
CNNMoney.com is reporting: "House backs IBM pension ruling." According to the article:
The House of Representatives voted 237-162 Tuesday to prohibit the government from trying to use regulations to overturn a court case that ruled against the cash balance pension plan of International Business Machines Corp.The move echoed a vote the House took a year ago. But the sponsor of both measures, Rep. Bernard Sanders, an Independent from Vermont, argued that Congress should weigh in on the subject again to make clear its opposition to cash balance plans that do not include protections for older workers.
Opponents of the measure charge that Sanders is trying to "enshrine in law a flawed court case," and warned that such a measure would undermine pension plans generally:
"Given the growing reluctance of business to sponsor additional defined benefit plans, this amendment is just one more reason for companies to walk away from this type of pension," [Rep. Sam] Johnson said.
The Wall Street Journal (subscription required) also reports on the development: "House Votes to Bar U.S. Intervention On IBM Pensions."
You can access the legislation here. The language of the amendment reads as follows:
None of the funds appropriated by this Act may be used to assist in overturning the judicial ruling contained in the Memorandum and Order of the United States District Court for the Southern District of Illinois entered on July 31, 2003, in the action entitled Kathi Cooper, Beth Harrington, and Matthew Hilleshein, Individually and on Behalf of All ThoseSimilarly Situated vs. IBM Personal Pension Plan and IBM Corporation (CivilNo. 99-829-GPM).
You can read about the amendment in this previous post here. (For background on the cash balance plan controversy, previous posts on the topic are here and here.)
Last week the Committee on Education and the Workforce held a hearing entitled "Examining Cash Balance Pension Plans: Separating Myth from Fact." Plan Sponsor has an excellent summary of the hearing here.
Don't have time to read it all? Here are some important excerpts from testimony at the hearing:
Opening Statement by Rep. John Boehner (R-OH), Chairman:
The recent wave of litigation surrounding cash balance plans has raised concerns from employers, workers, and policymakers alike. One well-documented court case involves IBM, but the initial ruling runs counter to existing law and a large body of other court decisions. In this case, the judge found the cash balance plan design inherently age discriminatory because equal pay credits for younger workers have a longer period of time to earn interest and accrue benefits before retirement than the same pay credits for older workers. This interpretation essentially means it would be age discriminatory to make equal contributions on behalf of workers with different ages. This is inconsistent with every other pension design and this logic would make a basic savings account, 401(k) plans, and even Social Security benefits automatically age discriminatory. We’re not here to debate the IBM case, but we also need to make sure cash balance plans aren't forced into extinction at the expense of the interests of workers.Most courts have ruled no age discrimination occurs with cash balance plans if the pay and interest credits given to older employee accounts are equal to or greater than those of younger employees. The most recent ruling on this topic, issued just last month in the Tootle case, agrees that cash balance plans are not inherently age discriminatory.
Testimony of James M. Delaplane, Jr., Partner, the Benefits Group of Davis & Harman LLP, Special Counsel, American Benefits Council:
Disregarding the interpretation contained in the proposed regulations and other legal authorities, one federal district court judge dramatically shifted the focus of the debate surrounding hybrid plans by declaring in July 2003 in the case of Cooper v. IBM that hybrid plan designs were inherently age discriminatory. According to the court’s flawed logic, simple compound interest is illegal in the context of defined benefit pension plans. Under the Cooper court’s reasoning, a pension design is discriminatory even if the employer makes equal contributions to the plan on behalf of all its workers and, ironically, even in many instances where the design provides greater contributions for older workers. Such a conclusion flies in the face of common sense. It would hold all 1,200 plus hybrid pension plans, regardless of whether adopted as new plans or through conversion from traditional plans, to be in violation of the pension age discrimination laws.The conclusion that all hybrid plan designs are inherently age discriminatory begs the question why the Internal Revenue Service issued favorable determination letters for fifteen years blessing hybrid plan designs and issued proposed regulations providing that the cash balance plan design is not inherently age discriminatory. It is surprising, at a minimum, that the Cooper decision completely ignored this history. .
Testimony of Ellen Collier, Director of Benefits, Eaton Corporation, on behalf of the Coalition to Preserve the Defined Benefit System:
If Congress does not move quickly to provide legal certainty for hybrid plans, many Americans may soon lose valuable retirement benefits. The current legal landscape is ominous. One rogue judicial decision has made the threat of age discrimination class action litigation a very real concern for employers. Potential damage awards from such suits could reach astronomical figures -- into the hundreds of millions or even billions of dollars – and the potential amounts of these awards continue to grow the longer the plans remain in effect. In Eaton’s case, the cost to modify our plan for alleged “age discrimination” in its design could curtail our ability to commit funds for other important functions, such as for research and development – and this is for a plan that has not yet been in existence for 3 years!
Testimony of Robert L. Clark, Professor, College of Management, North Carolina State University:
. . [P]olicy makers must remember that the pension system is voluntary and employers have many choices. A key concern is what is the appropriate counterfactual if conversions to cash balance plans are not allowed. If cash balance plans are not an option, firms my terminate their defined benefit plans and have no new plan, they might terminate their defined benefit plans and establish a new defined contribution plan, or they may retain the current plan but change the benefit formulas to reduce or eliminate the early retirement subsidies. Would the opponents of cash balance plans prefer one of these options? With this caveat in mind, regulations that are only aimed at preventing cash balance conversions would seem unwise and unlikely to achieve the desired result.
Testimoy of Robert F. Hill, Esq.:
. . . Congress has enacted very specific and very different legal frameworks for defined benefit plans and defined contribution plans. These rules were designed—with a recognition that taxpayers pay hundreds of millions of dollars to subsidize the private tax-qualified pension system--to assure that employees were treated fairly and to avoid abusive practices that undermine the promises made to employees and the employees’ reasonable expectations. The Joint Committee on Taxation has estimated that in 2004 taxpayers will pay about $89 billion in foregone taxes to subsidize the private tax-qualified pension system. It is only right and proper that Congress assure that the taxpayers’ monies provide a system that is fair to all workers, including older workers.
Testimony of Nancy M. Pfotenhauer, President, Independent Women’s Forum:
We believe the emergence of hybrid plans is encouraging news for many and a cause for particular hope among women. In fact, one benchmark study done in 1998 by the Society of Actuaries found that an amazing 77% of women do better under a cash balance approach. They are better off under a cash balance system because they move in and out of the workforce in order to balance family needs and because they cannot afford to take early retirement. Despite this promise, it is clear that controversy exists about how firms should transition to hybrid plans. Many have questioned the fairness of changing pension approaches for employees over 40 years of age.An alternative perspective, and one that IWF believes has credence, is that any adoption of restrictions that effectively limit the ability of companies to transition to hybrid plans places the financial well-being of the relatively few employees who have had the luxury of staying with one company for a long period of time (decades), have the luxury of taking early retirement, and have the luxury of taking their pension benefit in the form of an annuity rather than as a lump sum, ahead of all of the employees who do not have these options.
The IRS and Treasury issued this press release today:
Today, the Treasury Department and the IRS announced the withdrawal of proposed regulations on cash balance pension plans and cash balance conversions.The regulations are being withdrawn to provide Congress an opportunity to review and consider a legislative proposal on cash balance plans that was included in the Administration's Budget for Fiscal Year 2005. The legislative proposal would require a five-year "hold harmless" period for current employees following a cash balance conversion, would ban benefit "wear-away" after a cash balance conversion, and would clarify the legal status of cash balance plans and other hybrid plans.
What about all of those cash balance plans sitting at the IRS, waiting for determination letters to be issued? Announcement 2004-57 published with the press release contains the following statement:
Beginning September 15, 1999, cases in which an application for a determination letter or a plan under examination involved a cash balance conversion were required to be submitted to the Washington, D.C. office of the IRS for technical advice on the conversion's effect on the plan's qualified status. Many such cases were submitted and are still pending. Treasury and the IRS do not intend to process these technical advice cases while cash balance plan and cash balance conversion issues are under consideration by Congress.
Another "whipsaw" cash balance plan case to add to your reading list--West v. AK Steel Corporation Retirement Accumulation Plan, USDC So Ohio, 1:02cv0001. (No link available.) The issue presented in the case was whether the lump sum payments to plaintiffs complied with ERISA. The plan was paying out lump sum distributions equal to the hypothetical account balance. Plaintiffs' contended that they should have been paid a higher amount equal to the actuarial equivalent of the annual benefit to which plaintiffs would have been entitled if they had remained in the plan until age 65.
The court held that the plan's payment of lump sum distributions did not comply with ERISA and reiterated the positions espoused in other cases, upholding the resulting "whipsaw" effect. (The Treasury Department has defined this whole "whipsaw" problem in its recent cash balance plan proposals, issued in February of this year:
Three federal appellate courts have addressed the calculation of lump sum distributions under cash balance plans. Berger v. Xerox Corp. Retirement Income Guarantee Plan, 338 F.3d 755 (7th Cir. 2003); Esden v. Bank of Boston, 229 F.3d 154 (2d Cir. 2000), cert. dismissed, 531 U.S. 1061 (2001); Lyons v. Georgia-Pacific Salaried Employees Retirement Plan, 221 F.3d 1235 (11th Cir. 2000), cert. denied, 532 U.S. 967 (2001). All three courts held that a participant's hypothetical account balance must be projected to normal retirement age using the plan's interest crediting rate, converted to an annuity, and then discounted to a lump sum using the section 417(e) interest rate. If the plan's interest crediting rate is the section 417(e) rate, the present value of the normal retirement age annuity will be the same as the hypothetical account balance. However, if the plan's interest crediting rate is higher than the section 417(e) rate, the present value of the normal retirement age annuity - and the amount of any lump sum distribution - will be greater than the hypothetical account balance. This result is sometimes referred to as "whipsaw."These federal court decisions have followed an analysis set out in IRS Notice 96-8. Many plan sponsors have responded to whipsaw by limiting the interest crediting rate to the section 417(e) rate (or a deemed equivalent). This response effectively makes the section 417(e) rate a ceiling on plan interest credits.
While the West case is not a court of appeals decision, arguments which were rejected in the case are particularly noteworthy. (At one point in the opinion, the court goes so far as to call the defendants arguments as "creative.") Of interest is the fact that the defendants in the case tried to argue that the "accrued benefit" under the plan was the hypothetical account balance, but the court noted that the plan document clearly defined it as a "single life annuity commencing at normal retirement age." The court did indicate in dicta,however, that "[i]f the plan drafters had intended otherwise. . . they could have indicated that intent in the language of the Plan."
The court went on to reject the defendants argument that, when projecting the benefit forward to an annuity at age 65 (for purposes of discounting back for the lump sum amount) the interest to be utilized should be governed by section 204(c)(3) of ERISA. Instead, the court held that the rate which should be utilized for projecting the benefit forward to an annuity at age 65 was the rate at which future interest credits would be calculated under the terms of the plan.
As far as the discount rate to be utilized in determining the lump sum benefit, the court relied on IRS Notice 96-8, Regulation section 1.411(a)-11(d), and previous cases which had upheld the Notice and Regulation, and rejected the defendants argument that Regulation section 1.411(a)-11(d) was invalidated when ERISA section 203(e) of ERISA was amended in 1994.
Please note that under the Bush administration's cash balance plan legislative proposals, whipsaw would be eliminated prospectively, as indicated in the 2004 Blue Book entitled "General Explanations of the Administration's Fiscal Year 2005 Revenue Proposals." :
The proposal would eliminate whipsaw, providing that a cash balance plan may distribute a participant's account balance as a lump sum distribution as long as the plan does not credit interest in excess of a market rate of return. The Secretary would be authorized to provide safe harbors for what constitutes a market rate of return and to prescribe appropriate conditions regarding the calculation of plan distributions. This would permit plan sponsors to give higher interest credits to participants, resulting in larger retirement accumulations.
More cash balance plan reading:
An article by Dallas L. Salisbury, president and CEO of the Employee Benefit Research Institute from BenefitNews.com--"Will cash balance plans survive?"
Some of you may have read a recent article in a newsletter from a major benefits consulting firm which discussed developments in the cash balance plan litigation arena. The article states that "[t]he first appellate court to consider whether the plan design violates federal age discrimination laws has ruled in favor of the plans." The article later describes how in an unpublished opinion, the "Ninth Circuit Court of Appeals ruled on CBS’ adoption of a cash balance plan and the conversion method it used" and "held that the plan and conversion method do not violate ERISA’s fiduciary standards, do not result in an impermissible cutback of benefits and do not violate federal age discrimination laws."
Here is what the unpublished opinion in Godinez et al. v. CBS Corporation et al., 81 Fed.Appx. 949, 2003 WL 22803700 (9th Cir. 2003), actually said:
1. "Appellants' ERISA fiduciary claim fails because ERISA's fiduciary duty provisions are not implicated where the employer, acting as the Retirement Plan's settlor, changes the form or structure of the Plan."
2. "Appellants' claim under 29 U.S.C. section 1054(g) fails because Appellants did not put forth any substantive evidence to show a decrease in their benefit accruals. As CBS carried its burden of production on summary judgment, Appellants were required to present specific evidence in response. . . .The closest Appellants came to offering evidence of a decline in their accrual rate was their experts' promise that future study and analysis of the Cash Balance Plan would establish that the Appellants' pensions would have been larger had CBS continued the Traditional Pension Plan. However, no calculations were provided to the court, and Appellants' conclusory assertions are insufficient to defeat summary judgment. Therefore, the district court did not err in granting summary judgment in favor of CBS on Appellants' claim for decrease of accrued benefits under ERISA."
3. "Appellants' ADEA claim fails because they failed to produce any evidence that conversion to the Cash Balance Plan disproportionately impacted older employees."
When I first read the article, I became intrigued that there might now be a Court of Appeals decision supportive of cash balance plans. However, after reading the unpublished opinion, I do not think the case comes out quite as strongly in favor of cash balance plans as the article seems to imply, ruling instead that there was not any substantive evidence presented in favor of appellants' claims.
For more on the cash balance plan controversy, there are links pertaining to cash balance plan litigation in the right-hand column. You can also access previous posts on the subject here or here.
The New York Times is reporting that Xerox has reached a settlement with former plan participants of the Xerox cash balance plan in the amount of $239 million: "Xerox Settles Pension Suit With Retirees."
The proposed settlement is contingent on court approval and involves former plan participants who left Xerox's employ between the years 1990 and 2000 and elected to take a lump sum when they left in lieu of a pension commencing when they reached age 65. According to the article, Xerox said it would not have to contribute additional money to the plan to cover the payout until at least 2005.
Quote of Note: "Xerox had said it might appeal the case to the Supreme Court but acknowledged with the settlement that it had abandoned that idea. A spokeswoman, Christa Carone, said the company wanted 'to avoid any further uncertainty or legal expenses" stemming from the dispute.'"
You can access the press release from Xerox here.
If you would like to learn more about the case, Berger et al. v. Xerox Corporation Retirement Income Guarantee Plan, you can access some links to articles discussing the case under "Cash Balance Plan Litigation Links" over on the right. (Scroll down some.)
The following articles discuss reaction to the agreement made by Congressional conferees to adopt the Harkin's Amendment relating to cash balance plans (discussed here and here):
Also, from the Wall Street Journal:
From Plan Sponsor: "Cash Balance Regs "On" Again - But…"
From the American Benefits Council: "Council Condemns Inclusion of Cash Balance Provision in Appropriations Bill"
From ERIC: "ERIC Statement on Passage of Harkin Cash Balance Amendment"
Reuters is reporting on what transpired late yesterday as representatives from the House and the Senate hashed out how to go forward with the Sanders' and the Harkin's measures addressing cash balance plans. (Previous post on the issues here.) The article by Reuters--"U.S. lawmakers hit cash balance pension rules"--indicates the following:
Negotiators from both chambers had to reconcile the two approaches as part of the annual spending bill that funds the Treasury Department. They basically embraced the Senate provision and dropped the House language involving the court case.
The article stated further:
. . . lawmakers also said the Treasury must offer legislation within 180 days on how best to convert traditional pensions to the newer cash balance plans -- giving the administration another chance to set out a regulatory framework for such changes that Congress might embrace.
You can read about the Senate provision here.
More on this later . . .
The American Benefits Council states on their website that "Congressional appropriations conferees are expected to meet no later than November 12 to reconcile the House and Senate versions of the Treasury/Transportation appropriations bill (H.R. 2989) containing harmful cash balance plan provisions." They also state that "[a]s part of the Council's continuing effort to strip these provisions from the final conference report" they have developed a draft letter for plan sponsors to complete and fax to the appropriations conferees and congressional leadership staff. You can access this information on their website.
At the ALI-ABA "Annual Fall Employee Benefits Law and Practice Update" (discussed in previous posts here and here) Bill Sweetnam, Benefits Tax Counsel for the Department of Treasury, encouraged practitioners to write their Congressmen regarding cash balance plans, since he said that there seems to have been very little support for cash balance plans expressed on the House or the Senate floor when the Sanders and the Harkin's measures were passed.
The American Benefits Council also has a legal opinion on cash balance plans prepared by Richard Epstein which you can access here. Highlights of the opinion are as follows:
(1) "In the House floor debate, the proponents of Section 742 [Sanders Amendment] portrayed CBF pension plans as a witch's brew of age discrimination, breach of contract, and theft of employe pension assets, which they claimed the Cooper decision remedies. Their portrayal of CBF plans and Cooper does not withstand scrutiny. . ."
(2) "The apparent aim of this provision is to block the Treasury Department from issuing further regulations on ERISA section 204(b)(1)(H) or from participating in the Cooper litigation or other litigation insofar as it wishes to register its disagreement with Cooper. Even the requirement that the Department be silent on the entire matter would be deeply troublesome. Even more troublesome is that the agency may be allowed to speak on one side of the issue but not the other (i.e. it may not assist in overturning, but could assist in upholding Cooper) . . . . It is a generally accepted principle of constitutional law that the Congress may not through its legislation trample on the prerogatives of the Executive Branch in the discharge of its duty to see that the laws are faithfully executed. . . ."
(3) "The IBM plan and all other CBF plans satisfy ERISA section 204(b)(1)(H) by using the same rate of interest throughout the plan. The district court, however, ruled that the rate of benefit accrual referred to in that provision is the same as the employee's total benefit accrued, thereby requiring the same dollar amount of interest for the 24- and 64-year old employees in the above example. The district court, in effect, confused velocity with distance. It is as though the court decreed that two people, one 24 and the other 64, running at the same speed, will be deemed to have run at the same speed only if both cover the same distance by the time each reaches age 65, 40 years apart. That, however, is a conceptual muddle and a physical impossibility. Congress clearly did not mandate such a nonsensical result."
(4) "The result in Cooper cannot be justified on a public policy basis to avoid discrimination against older employees. To the contrary, it effectively mandates reverse age-discrimination, on an unprecedented scale."
("CBF" stands for "cash balance formula.")
The irony of all of this is that tomorrow will be a big day for deciding issues pertaining to reverse age-discrimination: Congressional appropriations conferees will be deciding the fate of the Sanders and Harkin's measures while at the same time the U.S. Supreme Court will hear oral arguments in the General Dynamics case to decide the fate of reverse age-discrimination claims.
Bill Sweetnam, Benefits Tax Counsel for the Department of Treasury, and Roger Siske, attorney with Sonnenschein Nath & Rosenthal, spoke at the ALI-ABA "Annual Fall Employee Benefits Law and Practice Update" and enlightened practitioners on the cash balance plan controversy. (For those who do not know, a cash balance pension plan is a defined benefit plan that is designed to work like a defined contribution plan. A cash balance plan establishes a "hypothetical account" for each employee and credits the account with hypothetical "pay credits" and "interest credits." However, under these plans, the employer bears the investment risk which results in retirement security not available under a defined contribution plan.)
Bill Sweetnam gave an overview of what has transpired in the cash balance plan arena:
(1) Mr. Sweetnam remarked that, back in December of last year, the Treasury had issued regulations governing cash balance plans which basically opined that cash balance plan formulas and conversions in and of themselves were not age discriminatory if certain conditions were met. (Note: When the IRS issued its proposed cash balance plan regulations, they dealt with two separate types of discrimination: (1) discrimination in favor of highly compensated employees, and (2) discrimination against older employees. When the IRS withdrew a portion of the regulations, it withdrew the portion pertaining to discrimination in favor of highly compensated employees, but not the portion of the regulations pertaining to age discrimination.)
(2) Mr. Sweetnam also went on to say, that when the IBM cash balance plan decision was issued this summer (Cooper et al. v. the IBM Personal Pension Plan et al.) and ruled that cash balance plans were inherently age discriminatory, this sparked a lot of interest in the Treasury's cash balance plan regulations. Both the House and the Senate passed amendments to the Appropriations Bills blocking the Treasury from issuing regulations. Mr. Sweetnam said that there are various other measures on cash balance plans being proposed which would seek to resolve the differences in the House and the Senate measures. (You can access the House amendment called the "Sanders Amendment" here and the Senate amendment called the "Harkin Amendment" here from previous posts.) One of the most interesting comments made by Mr. Sweetnam was that when both of these measures were introduced in the House and the Senate, respectively, there was little, if any, support expressed on the House or Senate floor for cash balance plans.
(3) There is very little hope that the IRS will begin issuing determination letters for the cash balance plans which are "stuck" at the national office (400 or so of them, according to Mr. Sweetnam) due to the "freeze" on determination letters. Under this "freeze," determination letters will not be issued for cash balance plans which have been converted from defined benefit plans.
What should plan sponsors be doing regarding cash balance plans? Roger Siske stated that, even though the IBM decision did not reach a good result, in his opinion, it nevertheless was "well-reasoned" so that other courts may end up adopting this reasoning as well. For employers with current cash balance plans, the recommendation was to do a "risk analysis" and determine what it would mean for the employer if the IBM case is upheld. Because ERISA prohibits discrimination based upon increased age at all ages and not just for employees who have attained age 40, the possibility is raised that each employee would have to be "topped up" to the highest rate of benefit accrual of any other younger employee under the plan so that any "risk analysis" should include this possibility.
Employers should weigh the risks of continuing their plans and should consider amending their plans to traditional defined benefit plans or defined contribution plans, according to Mr. Siske. Regarding amendments to plans, the following was discussed:
(1) It is unclear whether any amendments may be made to reduce or even change the future interest crediting rates for existing accruals.
(2) The cash balance plan formula could be frozen, though, to limit the accrued benefits to benefits accrued on the date of the amendment.
(3) The Plan could be amended to provide for a benefit equal to the larger of the frozen cash balance plan accrued benefit or a new traditional defined benefit formula which over time would wear away the damage exposure with respect to employees who continue to accrue a benefit provided under the traditional defined benefit formula.
Yesterday, I noted that the Senate had voted to block the Treasury Department from issuing regulations governing cash balance plans. The amendment--referred to as the "Harkin's amendment" since it was introduced by Senator Tom Harkin (D-IA)--is Amendment No. 1905 to H.R. 2989, the Transportation, Treasury, and Independent Agencies Appropriations Act of 2004. The Amendment reads as follows:
(Purpose: To prohibit the Internal Revenue Service from using funds to go forward with its proposed cash balance regulation) SEC. . None of the funds made available in this Act may be used by the Secretary of the Treasury or his delegate to issue any rule or regulation which implements the proposed amendments to Internal Revenue Service regulations set forth in REG-209500-86 and REG-164464-02, filed December 10, 2002, or any amendments reaching results similar to such proposed amendments.You can find out more about the bill at this link.
As most will recall, a decision was issued this summer--Cooper et al. v. the IBM Personal Pension Plan and IBM Corporation--holding that the IBM cash balance plan violated certain provisions of ERISA.
To learn more about what was said on the Senate floor Thursday before passage of the Amendment, continue reading . . .
Mr. HARKIN. Mr. President, I send an amendment to the desk and ask for its immediate consideration.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:
The Senator from Iowa [Mr. Harkin], for himself, Mr. Feingold, Mr. Kennedy, and Mr. Durbin, proposes an amendment numbered 1905.
Mr. HARKIN. Mr. President, I ask unanimous consent that reading of the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:
(Purpose: To prohibit the Internal Revenue Service from using funds to go forward with its proposed cash balance regulation)
At the appropriate place, insert the following:
SEC. . None of the funds made available in this Act may be used by the Secretary of the Treasury or his delegate to issue any rule or regulation which implements the proposed amendments to Internal Revenue Service regulations set forth in REG-209500-86 and REG-164464-02, filed December 10, 2002, or any amendments reaching results similar to such proposed amendments.
Mr. HARKIN. Mr. President, this amendment has some history in the Senate and the House. I will try to enlighten Senators as to the background and what it is about. Hopefully, we can have support for the amendment and adopt it.
Basically, it stops the Treasury Department from moving forward with a regulation that would allow companies to convert from a traditional defined benefit pension plan to a cash balance plan in a way that would hurt older workers. We are not saying they can't promulgate a rule that wouldn't allow a company to go from a defined benefit plan to a cash balance plan. We are just saying, they should not do it in a way that hurts older workers. Let me talk about that a little bit and what is behind it.
I am not totally opposed to cash balance plans. Some designs can be very good. Some can be a great deal better for younger workers, for example, than an uninsured defined contribution plan. Some are not. I am not saying we should prohibit any cash balance plans from existing. However, we need to make sure employers put in place a fair and equitable manner for treating these.
I have been following this issue closely for several years. In the mid-1990s, a groundswell of companies started converting from traditional defined benefit plans to hybrid plans, including cash balance plans. A couple of years later, some older workers who were nearing retirement started looking at the effect of this conversion on their account. They were shocked to find they hadn't been accruing any benefits for years. In other words, workers who were, say, in their forties or early fifties when the company converted from a defined benefit plan to a cash balance plan, didn't really know how the conversion would affect them. Then after several years, these older workers looked and found out they had been working for several years and their pension had not increased one penny, even though they had been working. Yet younger workers, age 20, 25, saw their pension plans increase.
A lot of workers nearing retirement, thinking they were going to get what they had assumed was going to be their retirement and their pension, all of a sudden found out their pension had been worn away over several years. It turned out that employers were freezing the accounts in the old plan, then they established a lower opening account balance in the new plan which meant, simply, that the longer you were in the plan, the longer you were working without earning any new benefits. That became a term called ``wearaway.'' In other words, your pension benefits wore away.
Many people said: This is nothing less than age discrimination. In other words, I am working for the company. I have been there for 20 years. They switch their pension program. A younger person gets more in their pension program than I get in mine.
A new 25-year-old employee would be getting more money contributed to their pension account, while a 45-year-old who had been loyal to the company for 20 years would not get anything. I was shocked and appalled to learn about this practice, and so were thousands of loyal, hard-working Americans.
In 1999, I introduced a bill to make it illegal for corporations to wear away the benefits of older workers during these conversions. We raised the profile of this issue. We raised it with Treasury. In September of 1999, the Treasury Department issued a moratorium on conversions from defined benefit plans to cash balance plans. The momentum against these unfair conversions was building as more and more companies changed, as more and more workers found their pensions were worn away.
In April of 2000, we in the Senate passed a sense-of-the-Senate resolution without objection, stating that the wearing away of current benefits during cash balance conversions is unfair and wrong--a unanimous sense-of-the-Senate resolution in April of 2000.
Well, now we go to 2001 and 2002, and not much is happening. That moratorium stayed on, by the way, through 2000, 2001, and 2002. However, last December, Treasury issued a regulation that would turn the clock back, undo the moratorium, allow more businesses to go forward with conversions in this wrong manner--the manner that would wear away the pensions of older workers.
Very soon after that, 191 members of the House of Representatives, and 26 Senators signed a bipartisan letter to President Bush asking that we do not reopen the floodgates, that we withdraw this rule and promulgate a rule that is fair and equitable. Well, now, as you might imagine, during this period of time some of these workers who found that their pensions had been worn away went to court. In August, a district judge in East St. Louis, in the case of Cooper v. IBM--IBM was one of the larger, well-known companies that engaged in this practice--ruled in favor of the plaintiff on her age discrimination claim.
Now, on September 9--I am talking about last month, and this case was decided in August--the House of Representatives voted 258 to 160--again bipartisan, with 65 Republicans voting for the amendment--saying that the IRS should not issue a regulation that would overturn this ruling by the district judge in East St. Louis.
So now we are into October. I might just say that all of these have been positive steps. We had a sense-of-the-Senate resolution in 2000. We had the moratorium. Last December, the Treasury Department--I might add, if I am not mistaken, I don't think there was a Secretary of the Treasury at that time in place--issued this rule to turn the clock back, and 196 members of the House and 26 Senators signed a letter to President Bush saying withdraw this rule and have one that is fair and equitable.
In August, there was the district court ruling. On September 9, last month, the House voted 250 to 196 that the IRS should not issue a regulation that would overturn this ruling. There have been a lot of positive steps, but this regulation is still hanging out there.
One other thing happened. Last January, Senator Durbin and I indicated that we might place a hold on the nomination of Mr. John Snow to be Secretary of the Treasury. Well, Mr. Snow was a very popular person and we didn't have anything personally against him; I want to make that clear. But we wanted to raise this issue. So Mr. Snow, a fine gentleman and outstanding business executive, someone who has gotten high accolades for his tenure in business as a business executive, met with Senator Durbin and me in my office. He said on this critical issue he would let fairness guide the regulatory process.
Mr. Snow had talked about what they had done at CSX, the company he had been CEO of, and how they had, I believe, instituted a cash balance plan, and a choice between the old plan and the new plan, which sounded fair and reasonable to me--let the worker decide what they want, which means many younger workers would probably pick the cash balance plan, and older workers might stay with a defined benefit plan. Mr. Snow said he would let fairness guide this regulatory process. That is the way we ought to go.
The fairness ought to be in working with Congress to develop this new regulation. So I think the best way to ensure that we do this is to ensure, No. 1, that Congress speaks on this issue; that Congress is involved in working with Treasury to make sure we come up with a fair and equitable rule dealing with pensions.
Secondly, I think the best way to make sure this happens, and to make sure that Congress is able to work and have a seat at the table is to adopt this amendment.
This regulation must be withdrawn. We need to work together to find a reasonable, bipartisan legislative solution to this complex problem. This is an incredibly important issue to American workers. It is very important for them to know that we stand united behind them in this struggle for fairness.
Mr. President, I spoke about this many times on the Senate floor. In terms of what distinguishes the American workplace in so many ways from others around the world, we have always valued loyalty and productivity in the American workplace--loyalty and productivity. If you are hard working and you are productive and you are loyal, U.S. companies have always valued that--at least they used to. That is one of the reasons companies have offered defined benefit pension plans. The longer you work and the more loyal you are to the company, you get a bigger pension. It makes sense.
So the longer you work someplace, the better you do your job, the more you learn about it, the more productive you are, that is what we value. We value that productivity and loyalty.
Now if companies are able to just break these promises at random, what kind of a signal does that send to U.S. workers? It tells workers they are foolish to be loyal because their employer could just change the rules of the game at any time and leave them out in the cold. It destroys the kind of work ethic that we have come to value and that I believe built this country, which distinguishes us from other countries around the world. We value fairness when it comes to workers. A deal is a deal.
I offer this analogy. Let's say I am offered a job. The employer says to me: OK, Senator Harkin, we are going to hire you and we are going to have a 5-year job here for you to do. If you stay with us for 5 years and you work for 5 years, we will give you a $50,000 bonus. I think that is a pretty good deal, so we shake hands, and I agree on that. So I worked at the company for 3 years, then my boss comes to me and says: Harkin, you know that deal we made where we said if you would work here 5 years, you would get a $50,000 bonus? Well, you have been here for 3 years and, guess what, the deal is off. Just like that, the deal is off. But I went to work for that company depending upon that.
That is what happens to a lot of people. They depend upon the kind of pension program the company has. That is one of the things, when companies recruit workers out of college or vocational schools, people look at what kind of pension program they have. Well, if after a certain amount of time they say, sorry, it is off, you don't get any of this, what does that say about loyalty and productivity?
I don't think that is the way we want to treat workers in this country where the employer holds all the cards and can change the deal anytime they want.
Again, I didn't have any stake--but, Harkin, you didn't contribute anything to that bonus. We said if you worked here 5 years, we would give you a $50,000 bonus, but we paid you the salary we agreed upon, did we not?
Yes.
You didn't put anything into that $50,000 bonus; that is something we were going to give you. Now we reneged on it. You don't have anything to gripe about.
Wait a minute. I have given 3 years to this company. I worked hard. I was productive because I wanted to get that bonus for 5 years, so it is not true to say I didn't put anything into the bonus.
This is like saying you didn't put anything into the pension plan. This is something the company offered you. Oh, yes, you did. You may have put in 20 or 25 years of loyal, hard work and diligence. If you had known 20 years ago they were going to pull the rug out from underneath you, would you have stayed with that company or would you maybe have gone someplace else?
Again, I hope people disabuse themselves of the idea that somehow a pension is just what the company offers you and you don't have any stake in it. You have a big stake in it. It is what they promised you when you went to work there, and you went to work there relying upon that promise. I am not saying they can't change their pension programs. Times change, conditions change, the workforce changes. I understand all that. New kinds of pension programs come on the market dealing with existing circumstances or what the future might be. That is fine, just as long as, No. 1, they treat workers fairly, and No. 2, that a deal is a deal. It seems to me if you work for a company for 20 years and they want to switch their pension plan, but you made a deal on one and you want to stick with that one, they ought to at least let you continue to work and retire under that plan. If you want to switch, it ought to be up to the worker.
That is what this amendment is all about. It is simply about saying to the Treasury Department they can't issue this proposed rule they have come up with which, as I said, last month the House voted 258 to 160 to say no to and which earlier this year 191 Members of the House and 26 Senators signed a letter to President Bush saying withdraw the rule.
That is what this amendment does. It simply says: Withdraw this rule; work with Congress. Let's have something that is fair and equitable for our workers.
Again, I urge my colleagues to join in support of this amendment in fairness to American workers.
Mr. President, I ask unanimous consent that a letter from the AARP dated October 23, 2003, be printed in the RECORD.
There being no objection, the material was ordered to be printed in the Record, as follows:
AMERICAN ASSOCIATION
OF RETIRED PERSONS,
Washington, DC, October 23, 2003.
Senator TOM HARKIN,
Hart Senate Office Building,
Washington, DC.
DEAR SENATOR HARKIN: AARP supports your amendment to the Transportation, Treasury and Independent Agencies Appropriations Act for Fiscal Year 2004 that would prohibit the IRS from using funds to go forward with its proposed cash balance regulations. The House passed a similar amendment on September 9, 2003 by a strong bipartisan vote of 258-160.
This amendment would not change existing law. It is in keeping with the court decision in Kathi Cooper, et al. v. IBM Personal Pension Plan, et al. The court concluded that cash balance pension plans discriminate against older workers, cut older workers' benefits, and serve to lower the costs and contribute to the profits of companies sponsoring cash balance plans.
In September 1999, the IRS imposed a moratorium on corporate plans that convert traditional defined benefit plans to a cash balance formula in order to allow Congress and others to review cash balance plans to make sure that the conversions comply with current pension and age discrimination laws. The moratorium suspended consideration of approximately 300 pending applications submitted by corporations to convert an existing plan to a cash balance formula. The Treasury proposed regulations in December 2002 that would lift the moratorium and allow corporations to establish plans that the federal courts have ruled discriminate against older workers.
AARP believes that Treasury should not act on regulations that would encourage companies to change their pension plans in a manner that is contrary to age discrimination laws and the federal court ruling. Rather, Congress should review the ruling and enact the pension reform measures necessary to protect older workers.
AARP urges you to vote for this timely and important amendment. AARP hopes that this amendment will send a strong message that we value older workers and that we reaffirm those older workers should not be subject to age discrimination in their pension plans and their pension benefits should be calculated fairly as directed by Congress and the Federal courts.
Please let me know, or have your staff call Frank Toohey (202-434-3760) of our Federal Affairs office if we can be of further assistance.
Sincerely,
Michael W. Naylor,
Director of Advocacy.
Mr. KENNEDY. Mr. President, it is a privilege to join Senator Harkin on this amendment to protect workers' retirement.
We know that for millions of American workers, their pension benefits are in danger. The continuing weak economy and rising health costs are pressuring thousands of employers to reduce or terminate their traditional defined benefit pension plans.
One way that companies are slashing costs is by converting traditional pension plans to cash balance plans. Older employees are the hardest hit by these conversions. According to the General Accounting Office, annual pension benefits of older employees can drop as much as 50 percent after a company converts to a cash balance plan.
Companies are doing it to save hundreds of millions of dollars in pension costs. But those savings are being taken out of the retirement security of American workers.
These proposed Treasury regulations would give companies legal protection against claims of age discrimination by older employees. Thousands of companies would have a strong incentive to convert to cash balance plans. Millions of workers could lose huge chunks of the pensions they have been promised.
Cash balance pension plans do have some advantages for some workers. Increased portability of pensions is important. So is providing pension benefits for parents, particularly women, who move in and out of the workforce. We support greater benefits for younger workers, who are more likely than ever to have several employers throughout their careers. But Treasury can and must do more to protect the workers who are hurt by these conversions.
The Harkin amendment would halt Treasury's proposed regulations. Workers should have choice about benefits under their pension plans, and they deserve protections when their company converts to a cash balance plan. It is wrong to let companies freeze the benefits for older workers, or reduce future benefits, when these workers have already contributed so many years of service to their companies.
I urge my colleagues to support this amendment, and do the right thing to protect the retirement of our Nation's workers.
The PRESIDING OFFICER. The Senator from Alabama.
Mr. SHELBY. Mr. President, the managers have no objection to the amendment offered by the Senator from Iowa. I urge the amendment be adopted.
Mr. President, we need to check something. I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. SHELBY. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. SHELBY. Mr. President, I want to say again the managers have no objection to this amendment, and I urge the amendment be adopted.
The PRESIDING OFFICER. Is there further debate? If there is no further debate, without objection, the amendment is agreed to.
The amendment (No. 1905) was agreed to.
The PRESIDING OFFICER. The Senator from Iowa.
Mr. HARKIN. Mr. President, I thank the managers of the bill for accepting this amendment. Again, this amendment is going to send a strong signal that both bodies want to work with the Treasury Department to establish a fair and equitable rule on pensions. I thank the managers.
Mr. SHELBY. I move to reconsider the vote.
Mrs. MURRAY. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mrs. MURRAY. I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Ms. MIKULSKI. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Reuters is reporting via Forbes.com: "U.S. Senate moves to stop Treasury pension rules." The article reports that the U.S. Senate on Thursday voted to block the Treasury Department from issuing certain regulations governing cash balance pension plans. The House of Representatives approved a similar measure last month called the "Sanders Amendment." You can read about the House measure here and here.
The Wall Street Journal also reports: "US Senate Votes To Block Cash-Balance Pension Regs."
Today's Wall Street Journal reports: "IBM Workers Seek Payments In Cash-Balance Pension Suit." According to the article, the employees are asking that the company recalculate participants' benefits and make additional payments for accrued benefit increases going back to 1995. Back in July, Judge Murphy ruled in favor of employees in this case, Cooper et al. v. IBM et al., holding that the IBM cash balance plan violated ERISA, but "left unresolved the question of what the workers should receive in damages, and directed parties in the case to propose what relief the court should order to address the violations." The article notes that if "the court approves the payment request, retired workers would get remedial payments if earlier benefits amounted to less than they would have been under the new formula, and some current employees would see benefits bumped up, according to Doug Sprong, a benefits lawyer at Korein Tillery in Belleville, Ill., who represented the plaintiffs." IBM has yet to file its response to the proposed damages.
"Treasury May Delay Pension Rules: White House Will Wait for Congress To Take Action on Cash-Balance Plans": the Wall Street Journal reports how "the Treasury Department may be backing off releasing long-awaited regulations on cash-balance pension plans, and will instead wait for Congress to act before it proceeds." The source of the information was an interview by Tax Analysts with Pam Olson, the assistant secretary for tax policy. (Tax Analysts reported the information on Wednesday.) The article also reports that the Journal confirmed this information with Treasury spokeswoman Tara Bradshaw who said that Ms. Olson had been accurately quoted in the Tax Analysts article, but added that the agency is still "working on the regulations -- we've been looking at all the [court] rulings and all the comments and are trying to figure out how to proceed."
In a previous post here this week, I discussed the Sanders amendment which was passed by the House on Tuesday and added to the Fiscal 2004 Transportation-Treasury Appropriations Bill. The Amendment would prohibit any funds in the bill from being used to assist in overturning the IBM cash balance plan ruling handed down by the federal district court of Southern Illinois last summer. One comment made on the House floor in support of the amendment: " . . we should not mess with this. . . I do not think the Congress should be messing with this. I do not think the administration should be messing with this. I think this should be left to the courts." (The House member quoted also called the cash balance plan controversy an "explosive political issue.")
Ironically, in a CNBC interview with Seventh Circuit Judge Richard Posner entitled "Richard Posner discusses his position on law, pragmatism and democracy" on Monday, July 28th (prior to the issuance of the opinion in the Xerox case, Berger et al. v. Xerox, which was written by Judge Posner) Mario Bartiromo for CNBC asked Judge Posner about his views regarding employees suing pension funds over reduced payments. His response was that with all of the litigation and all of the "detailed regulations of pension funds," Congress might have to "step in at some point and change the rules." Interestingly enough, as mentioned here before, Judge Posner may end up being one of the judges who will decide the appeal in Cooper et al. v. IBM Personal Pension Plan et al. since the case will go to the Seventh Circuit on appeal.
Well, it seems that Congress would like the courts to unravel the mess, and perhaps the feeling of some judges is that Congress should unravel the mess . . .
Towers Perrin has called on Congress to unravel it in this press release: "Towers Perrin Calls for Legislative Clarity for Cash Balance Plans." Quote of Note:"It is in everyone's interest for there to be clarity with respect to the rules governing cash balance plans. For years, the private pension system in the U.S. has been a key pillar of retirement security for millions of Americans. Confusion around the appropriate guidelines for the design of cash balance plans can only undermine private pensions and threaten this security . . .We believe that Congress should act immediately to clarify the past and future status of these plans."
Today's edition of the Wall Street Journal contains this op-ed: "Not Your Father's Pension." The article discusses the recent cash balance plan decisions and expresses the concern that has been stated by so many that, with all of the litigation over cash balance plans, employers may decide to terminate these plans for less costly plans which will be a loss to those who want them.
Proskauer Rose has posted on their website a very useful review and analysis of the IBM and Xerox cash balance plan cases handed down last week: "Cash Balance Plans: The Debate Continues."
Seyfarth Shaw has posted these helpful items as well:
You can access this transcript of a CNBC interview with Seventh Circuit Judge Richard Posner entitled "Richard Posner discusses his position on law, pragmatism and democracy" at this link. (Thanks to Howard and JD2B for the link.) The interview occured Monday, July 28th, prior to the issuance of the opinion in the Xerox case, Berger et al. v. Xerox, which was written by Judge Posner. Mario Bartiromo for CNBC asked Judge Posner about how he views cases involving employees who are suing pension funds over reduced payments. You can read his response at the link above. Interestingly enough, as mentioned here before, Judge Posner may also be one of the judges who will decide the appeal in Cooper et al. v. IBM Personal Pension Plan et al. since that case will go to the Seventh Circuit as well.
More on the IBM Cash Balance Plan Case:
Ellen E. Schultz and William M. Bulkeley for the Wall Street Journal report: "IBM Pension-Plan Changes Are Ruled Discriminatory: Finding Is Viewed as Boon To Older Workers in U.S." (Subscription required.)
Reuters has this: "IBM ruling turns promising pension move into headache."
The Times Argus Online also has an article entitled: "IBM workers in Vermont welcome ruling on pension plan."
"IBM pension move penalizes older workers, U.S. court says": Mary Williams March for the New York Times reports (via the International Herald Tribune.)
Friday brought more cash balance plan news, with a federal appeals court ordering Xerox Corp. to pay $300 million to former employees who the court determined were shortchanged when Xerox calculated lump-sum pension benefits due them when they left the company. You can access the opinion by Circuit Judge Richard A. Posner of the U.S. Court of Appeals for the Seventh Circuit at this link. The following news sources are reporting:
Albert B. Crenshaw for the Washington Post reports: "Court Backs Workers In Xerox Pension Fight."
Bloomberg.com has an article entitled: "Xerox Must Pay $300 Mln Judgment Over Pension Dispute."
"Xerox to Pay $300 Million In Suit Over Pension Plan": the Wall Street Journal reports. (Subscription required.)
PR Newswire has this regarding the case: "Cash Balance Court Ruling Could Harm U.S. Pension System, According to Watson Wyattt." From the news release:
"This ruling has the potential to cause great harm to the U.S. private pension system," said Eric Lofgren, Global Director of the Benefit Consulting Group of Watson Wyatt Worldwide. "Moreover, two other district courts and the U.S. Treasury Department have previously reached the opposite conclusion concerning the validity of cash balance plans."
SmartMoney.com reports in an article by Arden Dale for the Dow Jones Newswires: "IBM Pension Ruling Stirs Debate." The article quotes J. Mark Iwry, a senior fellow at the Brookings Institution and the former benefits tax counsel at the Treasury Department as saying that it "is likely that the issue will ultimately be resolved neither by the appellate courts nor by the executive branch but by the Congress." The article also quotes William Sweetnam, benefits tax counsel at Treasury as saying that Judge Murphy's decision does not refer to the Treasury initiative. Mr. Sweetnam also commented that the agency would continue to go "forward with our reg writing process."
More on the IBM Cash Balance Plan decision handed down yesterday and reported on here yesterday:
Albert B. Crenshaw for the WashingtonPost.com reports: "Judge Finds Age Bias in IBM Pensions: Experts Say Ruling Could End Other Employers' 'Cash Balance' Plans."
The American Benefits Council has issued a statement on the case. James Klein, ABC's President, states:
"Conversions to cash balance plans are currently the one good thing going on in the defined benefit pension plan system because they demonstrate a commitment by employers to remain within the defined benefit world. Other companies are exiting the system altogether. A decision like this sends one more negative signal to employers that 'no good deed goes unpunished' since it penalizes employers trying to provide their workers with a pension that is funded by the employer and guaranteed by the government, as opposed to requiring workers to rely solely on employee-funded retirement alternatives."You can also access a copy of the case on their website as well.
PlanSponsor.com reports: "Murphy’s Law: IBM Loses Cash Balance Ruling." (One time registration required.)
The Associated Press in this article--"IBM loses lawsuit over pensions: Federal judge rules firm discriminated against older workers at MSNBC.com quotes Mr. Klein as saying that "cash balance plans are 'currently the one good thing going' in an environment where many companies are dropping pension plans altogether and requiring employees to save for retirement on their own."