Catherwood LibraryILR School

Several months ago, two Southern California Gas employees sued the company because, during a transition to a cash-balance pension plan, they worked for years without accruing any additional pension benefits. A ruling was handed down yesterday by a Pasadena appeals court that allowed for cash-balance transitions but required the employer to provide fair warning, so that employees could begin to save more, or seek other employment. If fair warning is not provided, the entire company could be forced to revert to the old plan, favoring older employees. Cash-balance pension plans accrue benefits relatively evenly over time, whereas traditional plans favor long-term employees. Many older employees have opposed the cash-balance transition on the grounds that it is a discriminatory policy which causes them to lose benefits.