08 Aug 2006
On August 7, 2006, the US Court of Appeals for the Seventh Circuit ruled in favor of IBM in Cooper et al. v. IBM Personal Pension Plan and IBM Corporation, a long-standing lawsuit stemming from changes the company made to its pension plan in the late 1990s.
IBM had appealed two parts of a July 2003 decision in this case by the US District Court, which ruled that IBM's cash balance pension formula and the manner in which IBM calculated opening account balances in its cash balance formula violated age discrimination provisions of federal pension law. The appellate court has now rejected the judgment of the district court, finding in favor of IBM on both outstanding claims.
While IBM announced earlier this year that it would move away from defined benefit pension plans and focus on providing leading-edge defined contribution retirement plans instead, the appellate court's decision confirms that IBM's previous actions in connection with the cash balance plan were lawful and did not discriminate on the basis of age. The court said: "One need only look at IBM's formula to rule out a violation. It is age-neutral."
IBM Wins Pension Case Appeal