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PHILADELPHIA--A second federal appeals court has ruled that cash balance pension plans are not age discriminatory.
A unanimous three-judge panel of the 3rd U.S. Circuit Court of Appeals Tuesday upheld a 2005 lower court ruling that a cash balance plan sponsored by PNC Financial Services Group Inc. did not discriminate against the Pittsburgh-based bank's older employees.
In a broad opinion, written by Senior Judge Morton Ira Greenberg, the appeals court said that in evaluating whether a cash balance plan is age discriminatory, what matters is the benefit and interest credits employers provide to employees' accounts.
"We are concerned with what PNC puts into an account, not what the employee eventually may obtain from the plan on retirement," Judge Greenberg wrote.
"In evaluating the plan's inputs, PNC does not reduce contributions (in the form of either earnings or interest credits) to older employees," Judge Greenberg wrote.
The fact that the same benefit credit may result in a more valuable retirement annuity to a younger employee than an older employee "is not discrimination in whole or part based on age; rather it is the completely appropriate consequence of the application of an age-neutral principle to an accumulating account of the time value of money," according to the ruling.
That conclusion does not rewrite age discrimination law, the court said. "It is the appellants that are doing so in order to accommodate their position. As is our obligation, we are honoring the intent of Congress in reaching our result," according to the ruling.
The ruling comes five months after the 7th U.S. Circuit Court of Appeals unanimously ruled that cash balance plans in general and IBM Corp.'s plan in particular do not violate age discrimination law.