US District Judge D. Davis Legrome of the US District Court for the Eastern District of Pennsylvania issued the decision in a case involving Pittsburgh, Pennsylvania-based PNC Financial Services Group, which made the switch from a traditional pension to cash balance in 1999, Business Insurance reported.
Participants sued the financial services company in December 2004 with arguments that the plan discriminated against older workers (See Class-Action Filed Against PNC over Cash Balance Switch ).
The employees charged that the plan change violated the Employee Retirement Income Security Act (ERISA) for several reasons, including:
- it resulted in the absence of benefit accruals for several years for some participants,
- benefit accruals were more substantial for younger participants,
- the plan change notification did not comply with ERISA,
- the summary plan description violates ERISA,
- the defendants did not meet their fiduciary duties.
The case is Sandra Register vs. PNC Financial Services Group Inc.
The switch from defined benefit plans to cash balance plans has been controversial, (See One Bad Apple ). Other companies that have made the switch include IBM, AT&T, Xerox, and CIGNA. CitiGroup was also sued over a similar move (See Citigroup Sued Over Cash Balance Plan ).