Robin Schachter Quoted in PLANSPONSOR on Cash Balance Plan Lawsuits

Robin Schachter, a partner in Akin Gump’s tax practice, was quoted in PLANSPONSOR on the topic of cash balance plan lawsuits.

The article “PPA Reduced Lawsuits Against Cash Balance Plans” reports that cash balance plans, or defined benefit retirement plans, were first developed in the 1980s. Shortly after their inception, however, participants began suing them, with many of the cases based on age discrimination.

When the Pension Protection Act (PPA) was passed in 2006, according to the article, it said that as long as the rate of interest being paid to participants was not higher than the market rate, it was sufficient to avoid claims of age discrimination. There were also other types of lawsuits that cash balance plans were facing, but Schachter said that by permitting cash balance plans to convert a hypothetical account balance into benefits other than a lump-sum, the PPA had successfully eradicated those lawsuits. He continued, “That provision in the PPA resolved a lot of issues for both plan sponsors and participants and reduced a lot of litigation and uncertainty.”