Two Setbacks for Cash Balance and Pension Equity Plans

In two unrelated ERISA decisions last week, federal courts dealt significant blows to cash balance and pension equity plans. In one decision, a federal district court ruled that IBM Corporation's cash balance plan unlawfully discriminated against older workers under ERISA. On the following day, a federal court of appeals upheld a judgment against the Xerox Corporation cash balance plan awarding participants additional lump sum benefits based on a so-called "whipsaw" claim.