Compliance October 7, 2008

Supreme Court Denies Cash Balance Challenge Review

U.S. Supreme Court justices turned aside a request to rule whether cash balance plans are age biased as the high court refused to review a 6th U.S. Circuit Court of Appeals decision.
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The lower court ruling in Drutis v. Quebecor World (USA) Inc. held that any difference in benefits that employees of different ages received under the cash balance plan was “merely the result of the time value of money.” (See 6th Circuit Latest to Reject Cash Balance Age Discrimination Claims.)

Four former employees of Rand McNally & Co. claimed a cash balance pension plan sponsored by a firm that acquired Rand McNally violated the Employee Retirement Income Security Act’s (ERISA) anti-discrimination provision.

The Supreme Court also refused in 2007 to review a similar ruling by the 7th U.S. Circuit Court of Appeals involving IBM Corp.’s cash balance plan (see US Supreme Court Turns Away IBM Cash Balance Appeal).

The federal appellate courts for the 2nd, 3rd, 6th, 7th and 9th Circuits have rejected cash balance plan challenges.

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