Pensions That Discriminate Against Older Workers
Business Week (08/25/03) No. 3846 p.44; Byrnes, Nanette; Gleckman, Howard; Borrus, Amy

International Business Machines Corp. transformed its defined-benefit pension plan into a cash-balance plan, which caused many older workers to file a lawsuit against the company for discrimination. According to their calculations, the cash-balance plan gave more money to younger workers and less to those who had been with the company for years. On July 31, 2003, Federal Judge G. Patrick Murphy concluded that IBM's plan was unfair to its older employees and violated the Employee Retirement Income Security Act. However, the company plans to appeal the decision since other courts have ruled in favor of businesses with similar pension plans. Vagaries in federal pension laws have caused confusion among employers and their workers, and many advocates are calling for Congress to clarify pension rules. While pension funds are asking for clarification, employers are seeking permission for revolutionary plans that could leave many older workers without enough money for retirement.


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