|  | | 2004 News and Press Releases | | |
HEADLINE NEWS:
Cash Imbalance; Outcome Of Ibm Case Could Ripple Throughout Nation
Roger Fillion
Rocky Mountain News . December 27, 2004
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EXCERPT: A court case pitting IBM against about 130,000 current and former employees is a ticking time bomb - one that could produce shock waves for companies and employees in Colorado and nationwide. At issue: whether IBM discriminated against older workers when it replaced its traditional pension plan in 1995 with a new type of pension plan and then changed it yet again in 1999. A federal judge ruled last year that the changes were discriminatory because older employees' benefits at retirement would be less than those of younger workers. According to different studies, Big Blue's new pension plan cut some workers' pensions by up to 40 percent. Armonk, N.Y.-based IBM, which employs about 6,200 people in Colorado, plans to appeal the ruling. If Big Blue ultimately wins, more companies could adopt the kind of pension plan that's at the center of the IBM case. If IBM loses, the decision could lead to similar lawsuits and spell the death of so-called cash-balance pensions - unless Congress passes a law to protect such plans. "Employers and employees are watching this case," said Karen Friedman, policy director at the Pension Rights Center, a consumer advocacy group that seeks to protect worker pensions. "Congress is also watching this case." Under a traditional plan, an employee's pension benefits typically are calculated based on his or her last years of service. That's usually when an employee earns the most. The formula, which provides a specific benefit at retirement, rewards long-term loyalty. |
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