Hirt v. EQUITABLE RETIREMENT PLAN FOR EMPLOYEES

Court Rules Against Workers in Pension Age Discrimination Case

This case involved employees of The Equitable Life Assurance Society and Verizon Communications who claimed their employers' "cash balance" pension plans illegally discriminated against older workers. The employees argued these pension plans violated federal law by reducing the rate at which older employees earned retirement benefits compared to younger workers.

The Second Circuit Court of Appeals disagreed with the workers and ruled in favor of the employers. The court found that cash balance pension plans do not violate federal laws that prohibit age-based reductions in how quickly employees earn pension benefits. This decision upheld the dismissal of the workers' discrimination claims.

This ruling matters because it limits workers' ability to challenge certain types of pension plans on age discrimination grounds. Cash balance plans are common in many workplaces, and this decision makes it harder for older employees to argue that these plans unfairly favor younger workers. The court's reasoning was later supported by Congress, which passed legislation in 2006 clarifying that cash balance plans are generally legal. Workers concerned about their pension benefits should understand how their specific plan works and consult with benefits specialists if they have questions.