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House Votes For Cash-Balance Pension Opponents

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The U.S. House of Representatives has voted 258-160 to approve a measure that could help foes of cash-balance pension plans.

The measure, which was introduced as an amendment to H.R. 2989, an appropriations bill, by Rep. Bernie Sanders, Independent-Vermont, forbids the federal government from spending any funding to overturn a federal district court decision dealing with cash-balance plans.

The U.S. District Court in East St. Louis found in July that efforts by IBM Corp., Armonk, N.Y., to convert to a cash-balance plan violated federal pension age-discrimination laws.

Sanders, a Democratic Socialist who operates as an Independent in a chamber run by the Republicans, succeeded at getting the amendment passed despite the opposition of groups such as the American Benefits Council.

“This vote sends a strong message to the Bush administration and the Treasury Department that the time has come to finally protect workers who have seen their pensions slashed through cash-balance conversions by immediately withdrawing their proposed cash-balance regulations,” Sanders says in a statement about the passage of the amendment. “In addition, it also sends a message that Congress supports the federal court ruling declaring that cash-balance plans are age discriminatory.”

An employer that operates a traditional defined benefit pension plan bases contributions on a formula that assumes employees will work for the employer until retirement and accumulate more investment earnings on early contributions than on later contributions. Employers contribute less for new employees and more for employees with more years of service in an effort to ensure that more senior employees will end up with the same benefits as newer employees.

An employer that operates a cash-balance plan decides how much it will contribute to the plan one year at a time. The employer contributes the same amount for each participating employee at a given compensation level. The Treasury Department has ruled that converting to a cash-balance plan is not necessarily a form of age discrimination.

But U.S. District Judge G. Patrick Murphy ruled in July that IBM’s cash-balance plan conversion violated federal age-discrimination law because the benefit credits that younger participants earn each year are worth more than the credits older participants earn.

Readers can find more information about the amendment by looking up Amendment 378 in the Amendments section at

Information about the vote is posted at