Compliance November 11, 2003

Law Prof: Cash Balance Amendments 'Constitutionally Unsound'

November 11, 2003 (PLANSPONSOR.com) - In an opinion prepared for a retirement industry trade group, a University of Chicago law professor asserts that legislative amendments blocking the government cash balance plan rules are "substantively and constitutionally unsound."
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>According to a news release from the American Benefits Council, the opinion from Richard Epstein argues that these amendments – as well as the underlying Cooper v. IBM federal district court case (See  Murphy’s Law: IBM Loses Cash Balance Ruling ) – threaten the “separation of powers” provisions of the Constitution because they “prevent the President from faithfully executing the laws and manipulates the appellate process to deny the judiciary access to the views of the Treasury Department.”

>A congressional conference committee is expected to produce a final Treasury/Transportation bill soon. The cash balance pension plan amendments to that bill – proposed by Representative Bernard Sanders (I-Vermont) and Senator Tom Harkin (D-Iowa) – would ban the Treasury Department from finalizing the proposed regulations on cash balance plans issued late last year (See  Senate OKs Harkin Cash Balance Amendment ). The amendments would also hinder a Treasury Department challenge to the IBM ruling, which claimed that cash balance plans were age discriminatory.

>The Epstein opinion is available at:  http://www.americanbenefitscouncil.org/documents/epstein_treasltr.pdf .

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