Catherwood LibraryILR School

Increasingly, companies are seeking to switch from “defined benefit” pension plans in which long-time employees receive pensions based on their level of pay and their length of employment, to less costly cash “balance plans”---in the process cutting pension benefits to older workers by as much as fifty percent just as they reach retirement age. Responding to this problem, the Internal Revenue Service and the Treasury Department stopped approving such pension plan conversions as inherently discriminatory to older workers three years ago. Under the Bush Administration, however, the Treasury Department will today propose new rules allowing companies to resume such conversions once again, without barring companies from freezing pension accrual for older workers as part of the switchovers, in order to reduce their benefits to the lower levels of the new plans.