Wednesday, November 30, 2005
The Eastern District of Pennsylvania has just released a decision in Register v. PNC Financial Services Group, Inc., No. 04-CV-6097 (11/21/05), finding that the conversion of PNC's traditional defined benefit plan to a cash balance plan did not violate the age discrimination provisions of ERISA Section 204(b)(1)(H).
This is holding is in direct opposition to the Southern District of Illinois' finding in Cooper v. IBM Personal Pension Plans, 274 F. Supp. 2d 1010 (S.D. Ill. 2003), which concluded that cash balance plans almost inherently violate the benefit accrual rate age discrimination provisions of ERISA because the employee's benefit accrual must be determined solely in terms of a single life, normal retirement age annuity. The Register Court disagreed and concluded that, "the accrual rate should be 'the change in the employee's cash balance account from one year to the next.'"
Stay tuned as the Cooper decision is on appeal to the Seventh Circuit Court of Appeals and there is every reason to believe that the Register case will find its way to the Third Circuit Court of Appeals. Of course, a circuit split in this important area of employee benefits law could mean Supreme Court intervention.
Posted by: Paul M. Secunda