Replacement of pension plans with personal retirement accounts.

[Guest cebrooks]

Many major corporations have found a golden egg in traditional pension plans. They have created "personal retirement accounts" as a replacement for defined benifits plans. This "plan" earns approximately 4-8% per year and is great for a 25 year old exec. However the funding for the 50 year old falls short and virtually never reaches the defined plan's heights. Also all earnings above the 4-8% funding requirements are owned by the corp or its trustee. The last 4 years have been great for the custodians. Does this move not constitute some form of age discrimination? My pension has been frozen for the last 4 years with no chance for recovery. Thank God for the 401k.

[Guest lminsky]

It sounds like your employer converted its pension plan into a cash balance plan. Is that what you are getting at? If so, the current thinking is that there is no reduction in accrued benefits and, therefore, no violation of ERISA. However, I'm not so sure that this conclusion holds up. If you and other similarly situated collegues are so inclined- there are probably some creative benefits attorneys who would like a crack at this issue.

I hope this helps.