Mercer Select US - Court finds no ERISA violation for cash balance plan with interest credits tied to asset performance

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Court finds no ERISA violation for cash balance plan with interest credits tied to asset performance

Where a cash balance plan’s interest credits are based on the plan's actual investment returns, investment policy changes that result in lower returns do not violate ERISA's anti-cutback rules, a federal court in Wisconsin has ruled (Thompson v. Ret. Plan for Employees of S.C. Johnson). The plan credited participants' accounts with interest equal to 75 percent of actual returns (with a 4 percent floor). The court concluded participants have no protected right “to any particular investment policy decision or particular mix of investments,” so no reduction in accrued benefits occurred. (Select News, 12 Oct 2009)

Full text of district court's decision (2 Oct 2009) (PDF)

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