Compliance July 20, 2010

Cash Balance Settlement Gets Court Approval

A settlement of two cash balance pension challenge suits against JPMorgan Chase has won final approval from a federal judge. 

Reported by

U.S. District Judge Denise L. Cote of the U.S. District Court for the Southern District of New York signed off on the agreement covering approximately 100,000 plaintiffs in the two class actions under which the company will provide a year of financial planning services.  

One of the suits alleged Employee Retirement Income Security Act (ERISA) violations in that the cash balance plan of a company now part of JPMorgan Chase discriminated against older workers and had not provided an adequate notice when the plan was converted from a defined benefit program.   The second suit also alleged the cash balance program of another company later merged into JPMorgan Chase violated ERISA’s notice requirements (see Court Sends Slimmed-Down Cash Balance Suit on its Way).  

For more stories like this, sign up for the PLANADVISERdash daily newsletter.

The settlement applies to employees who had a vested benefit in JPMorgan’s cash balance plan or in a plan from one of JPMorgan’s predecessor companies.  

Cote also approved a plaintiffs’ request for $600,000 in costs and expenses.  

The case is In re JPMorgan Chase Cash Balance Litigation, S.D.N.Y., No. 06-cv-0732 (DLC)(THK).  
Data & Research July 20, 2010

Length in Retirement Plan Affects GenX Retirement Readiness

For Gen Xers (those currently ages 36–45), how long they are eligible to participate in a defined contribution (401(k)-type) retirement plan can make a big difference in whether they will have enough money to last through retirement, according to the non-partisan Employee Benefit Research Institute.

Reported by

The 2010 EBRI Retirement Readiness Rating shows a 40-percentage-point drop in being “at risk” or running short of money in retirement, based on whether a Gen Xer will never be eligible to participate in defined contribution plan, versus whether they have 20 or more years of eligibility.  

An EBRI Fast Facts said those with no future years of eligibility have an “at-risk” level of 60%, compared with only 20% for those with 20 or more years of eligibility in a defined contribution retirement plan.  

Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.

Even for Early Baby Boomers (those currently ages 56–62) and Late Boomers (those currently ages 46-55), future eligibility in a defined contribution plan still makes a large difference in at-risk levels for these age groups. The at-risk level for Early Boomers with no future years of eligibility is 54% compared with 38% for those with one to nine years of eligibility left, and the at-risk level for Late Boomers with no future years of eligibility is 53%, compared with only 27% for those with 10 to 19 years of eligibility left.  

The full results of the EBRI Retirement Readiness Rating are published in the July 2010 EBRI Issue Brief at http://www.ebri.org.

«