Big Blue to Take Up Cash Balance Comp Ruling

February 23, 2004 ( - IBM has vowed to ask a federal appeals court to review a lower court ruling that it must compensate workers and retirees over its cash balance pension plan conversion - a ruling that could cost it billions of dollars.

This most recent ruling last week, US District Judge G. Patrick Murphy said 140,000 IBM employees and retirees were entitled to compensation for retirement benefits they lost when IBM shifted to a cash-balance plan from its traditional pension, Reuters reported (See  IBM Cash Balance Judge: Plaintiffs Due Retroactive Benefits ).

IBM and lawyers for the plaintiffs will meet in a hearing Monday to talk about how to determine the prospective payments to the employees and retirees who were affected by the pension changes. The amount of that potential compensation is still undecided, IBM spokesman Kendra Collins said. But in court documents filed in December, IBM had said that based on one scenario proposed by the plaintiffs, it could be forced to pay up to $6 billion.

Armonk, New York-based IBM, the world’s largest computer company, disputes Murphy’s initial court ruling in July 2003 that it had discriminated against older workers and retirees by its cash balance changes

The case is being watched because of its potential implications for other major corporations where employees have complained that pension and health care benefits were reduced in corporate cost-cutting moves. Companies in addition to IBM that moved to “cash-balance” pension plans in the 1990s include Eastman Kodak Co. and Electronic Data Systems Corp.