The voice vote follows a similar move in the US House of Representatives, which last month forbade the Bush administration from trying to overturn a court ruling against a switch to a cash balance plan by International Business Machines Corp., according to a Reuters report.
“Withdraw this regulation,” Senator Tom Harkin (D-Iowa) said in support of his amendment to an annual spending bill that funds the Treasury department “We must not let this age-discriminatory practice resume.”Harkin stressed that he was not trying to stop all cash balance plans – just conversions that would hurt older employees. The cash balance regulations as proposed by Treasury would “turn the clock back” and “wear away the pensions of older workers,” he said.
The Senate action would stop the Treasury from finalizing the proposed cash balance plan regulations that were issued late last year (See Cash Balance Foes Threaten to Ball Up Snow Nomination ). The House measure was also attached to a spending bill and negotiators from both chambers will have to reconcile the two (See Emotion Charged Cash Balance Plan Amendment Passes US House ).
In a cash balance
plan, an employee’s average salary over the years
and contributions by the company are deciding
factors.While employers can save money by converting
from traditional defined benefit pension plans to cash
balance plans, older workers complain their pensions
are reduced as a result (see
The Basics on
Cash Balance Plans
A federal judge in Illinois ruled in August that IBM’s switch to such a pension plan in the 1990s discriminated against older employees (See Murphy’s Law: IBM Loses Cash Balance Ruling ).
A Treasury spokesman could not be immediately reached for comment. Last week, legal journal Tax Analysts reported that Treasury might be backing off releasing the cash balance regulations (See Congressional Cash Balance Opponents Tout “Win” ).