U.S. Court of Appeals for the Tenth Circuit

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Tenth Circuit addresses pension plans’ “wear-away” periods

August 11, 2011

The Tenth Circuit held that ERISA does not require notification of “wear-away periods” so long as employees are informed and forewarned of plan changes, and that the wear-away periods did not violate the Age Discrimination in Employment Act (ADEA).

U.S. Chamber files amicus brief

February 07, 2011

NCLC urged the Tenth Circuit to hold that El Paso Corporation did not violate the Age Discrimination in Employment Act or ERISA when it altered its pension plan. During the pension plan's transition, the overall benefits of some longer-serving workers did not grow until the cash balance under the new plan caught up to and exceeded the “frozen” benefits due under the old formula. The district court held that “wear-away” periods, or the time it takes for overall benefits to finally grow after a new plan is adopted, do not violate ERISA or the ADEA. In its brief, NCLC argued that appeals courts have unanimously upheld “wear-away” periods, and that cash balance pension plans provide employers the flexibility they need to administer voluntary retirement benefits.

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