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NEWARK, N.J.--Dun & Bradstreet Corp.'s cash balance pension plan does not discriminate against older employees, a federal judge has ruled.
In rejecting age discrimination charges against Short Hills, N.J.-based business information provider Dun & Bradstreet, U.S. District Court Judge Stanley Chesler of the District of New Jersey closely followed the decision last August of the 7th U.S. Circuit Court of Appeals that said cash balance plans in general, and IBM Corp.'s in particular, are not age discriminatory.
While the same benefit credit provided by a cash balance plan will generate a bigger retirement annuity for a younger employee than an older employee, that is the result of "time value of money" and not age discrimination, Judge Chesler ruled.
"The principle of compound interest and the passage of time produce the age differences that plaintiff complains of, but these are things that are correlated with age; they are not the effects of age discrimination," Judge Chesler wrote in his Jan. 26 ruling.
The ruling involving Dun & Bradstreet's 10-year-old cash balance plan is at least the third by a district court that followed the appeals court decision in the IBM case.
Two other judges, though, have gone the other way in suits involving Citigroup Inc. and JP Morgan Chase & Co. in which judges have ruled that cash balance plans are age discriminatory.
Legal experts say the issue is not likely to be resolved definitively until several more appeals courts issue rulings. Recently, the U.S. Supreme Court declined to review the IBM ruling.
Congress included a provision in a comprehensive pension funding reform measure passed last year that protects new cash balance plans that meet certain standards from age discrimination suits, leaving it to courts to settle the issue for already established plans.
Employers now sponsor roughly 1,200 to 1,500 cash balance plans, so named because accrued benefits are expressed as a cash lump sum.