3rd Circuit Upholds PNC Cash Balance Plan
Cash balance plans are in the air. Yesterday we reported on a decision by Judge Chesler of the District of New Jersey that upheld Dun & Bradstreet's cash balance plan against an age discrimination attack. Today the Third Circuit has weighed in on the issue, holding that PNC's cash balance plan does not unlawfully discriminate against older workers. The opinion is here and a related news article here.
The opinion is long and complicated, but it amounts to the idea that younger workers may benefit disproportionately from cash balance plans not because the employer affirmatively discriminates, but because of the time value of money. This, the court found, is not unlawful.
The Third Circuit is the second court of appeals to weigh in on this issue, in concert with the Seventh Circuit in the IBM case. There is still district court precedent from the Second Circuit that goes the other way and finds cash balance plans discriminatory.