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IBM said Friday it is in talks to settle a mammoth lawsuit alleging a pension plan adopted by the firm in the 1990s discriminated against 140,000 older workers. IBM agreed last week to settle a small part of the lawsuit, involving just a few thousand workers, in a case that has been closely watched by scores of large companies with similar pension plans. After a judge ruled in favor of the workers earlier this year, the company said an overall judgment involving its cash balance pension plan could cost more than $6.5 billion. The Illinois judge in charge of the case had been expected to announce damages soon. But IBM on Friday asked him to postpone the decision on payments to other employees, saying the company is “in discussions regarding a possible resolution of some of the remedies, issues and/or claims in the suit.” The partial settlement, disclosed in court filings Wednesday, involves employees who worked for the company for less than five years. That’s a very small portion of the 140,000 workers affected by the suit, filed in U.S. District Court for the Southern District of Illinois. IBM argued it shouldn’t be forced to make retroactive payments because it could not have foreseen the judge, G. Patrick Murphy, would declare the cash balance plan illegal. Murphy wrote in his decision that IBM wasn’t justified in claiming it was blindsided. “The prohibition against age discrimination existed long before the appearance of cash balance plans,” he wrote in his Feb. 12 ruling. “All that has changed is IBM’s clever, but ineffectual, response to law that it finds too restrictive for its business model.” Since the ruling, both sides have been waiting for him to announce the size of IBM’s payout. If IBM does not settle the case, a judgment could cost the company at least $6.5 billion, it said in a quarterly filing with the Securities and Exchange Commission. That would be the largest pension judgment in history. IBM has said it plans to appeal. Details of the partial settlement were not disclosed, but both sides expect to present the settlement during the third week of October, according to the filing. An IBM spokeswoman and lawyers for both IBM and the plaintiffs did not return calls seeking comment. The class action lawsuit challenges IBM’s cash balance pension plan. Such plans, which mushroomed in popularity in the 1990s, resemble 401(k) plans in that they let workers track the growth of their money in a hypothetical individual “account.” Unlike a 401(k), however, workers can’t allot any of their own pay to the plan or decide how it is invested. Traditional pension plans reward workers for sticking with a company over time, increasing their retirement benefits at a much faster rate during their last years of service. Cash balance plans are computed using a formula that awards benefits at a steady rate through a worker’s tenure. Opponents say cash-balance plans instituted when experienced workers are already nearing retirement age deprive employees of anticipated gains and leave them without enough working years to accrue cash balance benefits equal to what they would have received had the company kept a traditional pension. Copyright 2004 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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