Citigroup Ordered to Change Cash Balance Payment Credits
The latest ruling from U.S. District Judge Shira A. Scheindlin of the U.S. District Court for the Southern District of New York followed her order a year ago that the Citigroup cash balance program violated the Employee Retirement Income Security Act’s (ERISA) anti-backloading rules (See Court Gives Thumbs Down to Citigroup Cash Balance Plan ). The plan, Scheindlin ruled then, relied on a “fractional test” for figuring out minimum accruals only when a participant separates his or her service from Citigroup, rather than on a year-by-year basis as required by ERISA.
“This proposal best ensures that participants in the Plan receive the benefits to which they are entitled. As a result, this Court orders defendants to increase pay credits as required. To avoid further violation of ERISA, the Plan must make additional payments as required to avoid whipsaws,” Scheindlin asserted in the latest decision.
Relating to her earlier ruling that the Citigroup plan violated age discrimination rules, Scheindlin indicated in her latest decision that she would await the outcome of a pending cash balance age discrimination case from the 2 nd U.S. Circuit Court of Appeals before proceeding on that issue in the Citigroup matter.
The latest Scheindlin decision in In re Citigroup Pension Plan ERISA Litigation, S.D.N.Y., No. 05 Civ. 5296, 11/20/07, is here .
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