The Aftermath of the Cash Balance Controversy: Defining Age Discrimination for Traditional Defined Benefit Pensions
Edward A. Zelinsky
Yeshiva University - Benjamin N. Cardozo School of Law
February 3, 2009
Cardozo Legal Studies Research Paper No. 251
The appellate decisions upholding cash balance pensions against the claim of age discrimination are unconvincing. Nevertheless, these decisions reach the proper result as a matter of pension policy. These decisions read the statutory term "benefit accrual" as meaning employer contributions for purposes of measuring for age-based pension discrimination in the defined benefit context. However unpersuasive this reading may be as a textual matter, it reaches a sound outcome in terms of pension policy. In particular, this reading of the pension age discrimination statutes enables employers sponsoring traditional, annuity-paying defined benefit pensions to control their costs by decreasing the annual growth of the accrued benefits earned by older employees. This ability to subdue costs will encourage employers to remain with their traditional defined benefit plans rather than move to the cash balance format or 401(k). On the other hand, controlling costs by reducing the rates at which older workers accrue additional benefits will disappoint the reasonable pension expectations of some, perhaps many, of those older workers.
Number of Pages in PDF File: 47
Keywords: pensions, 401(k), age discrimination, defined benefit plans, pension protection act, annuityworking papers series
Date posted: February 4, 2009 ; Last revised: November 27, 2009
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo4 in 0.313 seconds