Compliance January 26, 2009

Court Upholds Higher Pension Contribution Requirement for Older Workers

January 26, 2009 (PLANSPONSOR.com) - The U.S. District Court for the District of Maryland has ruled that Baltimore County did not violate the Age Discrimination in Employment Act (ADEA) by requiring older workers to contribute to their pensions at a higher rate than younger workers.
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In its opinion the court concluded that Baltimore County was motivated by a permissible principle – the time value of money – rather than the age of new hires. The court noted that Baltimore County’s former system was based not on age, but on the number of years an employee has until reaching retirement age.

Prior to the lawsuit, employees’ pension contributions were calculated based on how long they would work for the county before they turn 60. Younger county employees were required to contribute about 4% to their pension systems and older employees 6% or more, according to a Baltimore Examiner news report.

The Equal Employment Opportunity Commission filed the lawsuit in September 2007 (see EEOC Accuses Baltimore County of Age Discrimination ), asking for a change in the pension system and that the two former correctional officers it represented, and others, be reimbursed for money it says was wrongfully withheld from their paychecks.

The Examiner says the county has since changed its pension system so all employees pay a flat 6% contribution rate.

The District Court opinion is here .

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