D.Conn. allows ADEA cash balance conversion lawsuit to proceed
An employee of the former Fleet Bank can move ahead with a lawsuit accusing her company of discriminating against thousands of older workers when it switched to a new type of pension plan, a federal judge has ruled.
The preliminary ruling by U.S. District Judge Janet Hall in Bridgeport, Conn., focuses on cash balance plans. Many large companies embraced cash balance as an alternative to traditional pensions in the late 1990s, before controversy erupted over whether the plans unfairly penalized workers with many years of experience.
A cash balance plan combines some aspects of a traditional pension plan with some trappings of a 401(k). Employers make a yearly contribution to a hypothetical individual “account.” Workers are allowed to take the money with them if they leave for another job.Hall’s ruling, dated March 31 and entered Monday, will likely be closely scrutinized because the case against Fleet – now owned by Bank of America Corp. – largely echoes a widely publicized case against IBM Corp. In that case, IBM has agreed to settle for up to $1.4 billion should it lose on appeal. Ironically, Bank of America is credited with creating the nation’s first cash balance plan, back in 1985.