Delta to Overhaul Pension Plan
Atlanta Journal-Constitution (11/19/02) p.1C; Grantham, Russell

Delta Air Lines announced that it would phase in a cash-balance pension plan over the next seven years for current employees, and those who are hired after June 30, 2003, will begin their employment under the cash-balance plan. The switch is expected to save the carrier $500 million over the next five years, and if employees retire before June 30, 2010, they will receive either the traditional or cash-balance plan funds, depending on which sum is greater. The current plan provides retirees with about 60 percent of their highest three years' pay, and the new plan will credit about 5 percent of their annual pay into their retirement accounts. However, Pension Rights Center Deputy Director John Holtz says, "over the long haul, many employees receive pension benefits that are hundreds of thousands of dollars lower under cash-balance plans." In fact, the U.S. Labor Department recently discovered that one in five cash-balance plans miscalculate pension payments, reducing retiree benefits by about $17 million per year. As a result, some employee groups have filed lawsuits against companies that institute cash-balance plans, alleging age discrimination and violations of the federal Employee Retirement Income Security Act. The Delta plan will affect 60,000 employees, but excludes pilots, and is part of the company's overall cost-cutting plan, which included grounding jets, reducing travel agent commissions, and trimming its staff by 18,000 employees.


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