>Upholding the US District Court for the Central District of California’s ruling in Godinezv. CBS Corp. the 9th US Circuit Court of Appeals found the conversion process used by CBS was actually advantageous to employees over 40. This was due to a special formula CBS developed to transition employees from one plan to the other, according to Washington-based legal publisher BNA.
>During the conversion, CBS placed employees into one of three groups to differentiate how pension benefits would be awarded. Those groups included:
- first group – employees closest to retirement who were not transferred to the cash balance plan
- second group – employees over the age of 41 who were awarded “transition pay credits” ranging from 0.5% to 6.5% of annual eligible salary, depending on an employee’s age and service years
- third group – workers under the age of 41 that were transferred to the cash balance plan without any pay credits.
>It was employees who fell within the nexus of the second group that initially filed suit. However, in upholding the lower court’s decision, the appellate court found that employees failed to present any evidence supporting their claim that the conversion to the cash balance plan disproportionately impacted older employees.
>In their suit, employees of the second category allege ERISA’s anti-cutback rule was violated in the CBS’ conversion since it decreased the rate in which benefits were accrued. Additionally, this group argued that the conversion violated ADEA because it provided less benefits to older workers.
>The district court granted summary judgment in favor of CBS after ruling there was insufficient evidence to support both the ERISA and ADEA claims. Further, the district court found no evidence in the employees’ claim that the group lost accrued benefits when CBS converted to the cash balance plan.
The case isGodinezv. CBS Corp.,9th Circuit, Number 02-56148.