Treasury Withdraws Pension Plan Rules

The Treasury withdrew proposed rules on how companies should convert traditional pension plans into “cash-balance” plans, which critics say are biased against older workers.

Treasury said it was withdrawing the proposal, initially made in December 2002, and urged Congress to consider a separate proposal on cash-balance plans included in the Bush administration’s 2005 budget.

Cash-balance pension plans are designed to even out company pension contributions over an employee’s career, unlike traditional plans in which benefits are calculated based on length of service and highest salaries earned.

While cash-balance plans have won praise for allowing workers to transfer earned benefits when they change jobs, some argue they discriminate against older workers.

Greg Jenner, Treasury’s acting assistant secretary for tax policy, said the department wants to “work with Congress to enact employee protections and remove legal uncertainty about cash-balance plans.”