"Corporations are hailing the many advantages to converting pensions to a cash balance plan, but an independent analysis showed that less than half of companies save any more than 5 percent in pension costs by making such a switch." " 'Cost reduction was not what a majority of the plans were trying to achieve.' ' Congress Hears Complaints On Pensions By CURT ANDERSON WASHINGTON (AP) - A 28-year electric utility employee told Congress the company's conversion to a new cash-balance pension plan will cost him $400,000 in benefits, which he said is evidence the popular plans discriminate against older workers. ``For me, this is a very serious loss,'' James Bruggeman, 51, of the Central and South West Corp. in Tulsa, Okla., told the Senate Aging Committee. ``It may very well change my retirement plans. I would have to work several more years to make up the loss.'' Bruggeman said that because of his long service, retirement benefits he expected under the company's previous traditional pension plan would have been 30 percent higher than under the new plan. And due to what's known as ``wearaway,'' the initial cash balance in his new pension account was $56,000 less than the equivalent lump sum in the old one and will require two years to recoup. ``It seems to me that something somebody is entitled to is lost,'' said Sen. Charles Grassley, R-Iowa, chairman of the panel. Similar complaints have been raised by hundreds of veteran employees around the country as more than 450 companies converted to the new plans. The plans frequently save employers money and provide younger workers with pensions that are more flexible, easier to carry from job to job and simpler to administer. Advocates for older people, however, say they violate anti-discrimination laws because, in cases like Bruggeman's, promised pension benefits are reduced for workers with long service. ``There is very definitely, for an older worker, less accumulation than there is for a younger worker,'' said Joseph Perkins, immediate past president of the AARP. ``We worry about the fact that it's the older worker who gets the raw end of the deal.'' Several bills have been introduced in Congress on the issue, some focusing on greater disclosure of how changes would affect individual workers and others requiring that companies give workers greater choice between new and old plans. In addition, several Clinton administration agencies are trying to determine if age discrimination laws are being violated. Industry representatives told the Aging Committee of many advantages to cash balance plans and said they don't inherently discriminate against older employees. An analysis by Watson Wyatt Worldwide Inc., a leading human resources consultant, showing that only about 45 percent of companies it studied saved greater than 5 percent in pension costs by making the switch. ``Cost reduction was not what a majority of the plans were trying to achieve,'' said Sylvester Schieber, Watson Wyatt's research director. Laurel Sweatt, benefits manager for Dallas-based CSW - the company Bruggeman works for - said the company took several steps to ``minimize any detrimental impact'' when it switched to the new plan. These included a choice between the new and old plans for employees who were 50 years old and had 10 years of service and an addition of 13 percent in base pay to accounts of workers who were over 40 and had at least five years' service. Some witnesses testified that more laws and regulations might force some companies to drop pensions altogether and continue a downward trend that has seen such benefits drop from 114,000 companies in 1985 to 44,000 today. ``We continue to believe that it is up to employers to decide what retirement strategy works best for them,'' said John Woyke, an attorney testifying on behalf of the U.S. Chamber of Commerce.
