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July 08, 2002 at 08:00 PM
NU Online News Service, July 8, 2:33 p.m. – Domini Social Investments L.L.C., New York, a socially conscious money manager, says it will present a resolution that calls for AT&T Corp., New York, to change the way it handles pension benefits for veteran employees.
AT&T converted its traditional defined benefit pension plan to a cash balance system in 1997.
An employer that sponsors a traditional plan bases contributions on the assumption that an employee will spend many years participating in the plan. Contributions for senior workers are higher.
A sponsor of a cash-balance plan computes contributions on a year-to-year basis, without taking participant seniority into account.
Advocates of the cash-balance approach say it’s better for the many workers who frequently change jobs, but critics say it can shortchange older, loyal workers who started out in a plan run the traditional way.
