The accounting giant had defined in its plan the normal
retirement age as "five years of service," which
is an invalid period under ERISA, the court said.
Therefore, the court said that the default retirement age
was the statutory 65.
The plaintiffs also sued the firm on the grounds that
the cash balance plan violates ERISA standards for
calculating lump-sum benefits payable from such a program,
standards for calculating accrued benefits and age
discrimination rules. But the court dismissed those
In 1994 Price Waterhouse replaced its previous defined
benefit arrangement with a cash balance plan, and when the
company merged with Cooper & Lybrand in 1999, all
employees were switched over to the plan. Under the plan, a
participant is fully vested after five years of employment
with the firm, meaning that PWC must then provide the
employee with 100% of the company's contributions to
the plan. However, participants who leave the company after
this five-year period can elect to receive their
"normal retirement" benefit as a lump sum
distribution at the time they leave, the opinion
The plaintiffs argued that because the plan's
definition of the retirement age violated ERISA, the
default age was 65, and then the plan should project the
balance of their hypothetical accounts forward to age 65
and the pay the present value of that projected balance.
The court agreed, ruling that three employees who left
the firm before they turned 65 should get lump-sum
distributions recalculated to include interest credits
they would have gotten between the time they left and age
The court also said the plan's normal
retirement age was invalid because it was not clearly
laid out in the summary plan description.