IBM Pensions Not Discriminatory, Appeals Court Rules

Law360, New York (August 7, 2006, 12:00 AM EDT) -- A U.S. Appeals Court panel overturned a lower court decision Monday that said International Business Machines Corp.’s pension plan discriminated against older workers.

The ruling came down to whether IBM’s cash-balance defined-benefit plan, which reduced pension benefits by up to 50% for some elderly workers, violated the Employee Retirement Income Security Act. Unlike traditional pension plans, in which benefits are calculated by multiplying years of service by average salary, a cash-balance plan creates a hypothetical account that grows each year largely on interest.

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