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IBM Corp. agreed to a deal Wednesday that all but settles a case in which 140,000 workers claimed the computer giant’s pension plan discriminated against older workers. The settlement limits IBM’s potential liability in the case to $1.7 billion; the company previously had estimated that a settlement could cost up to $6.5 billion. The plaintiffs settled for much less because some lawyers believe a federal judge’s ruling against IBM earlier this year may have been wrong, said Bruce Wolk, a law professor at the University of California, Davis. A federal court in Maryland ruled for a company in a similar case, he said. “I’m not surprised there’s a big discount, because IBM had a pretty good chance,” he said. The deal calls for IBM to immediately set aside $300 million to pay the plaintiffs. IBM reached a $20 million settlement earlier this month with 15,000 of the 140,000 workers. The two deals will lead the company to take a one-time charge of approximately $320 million in the third quarter. The latest deal, which must be approved by the courts, ends the company’s pension litigation on all but two claims. The crux of the case is the company’s “cash balance” pension plan, which it adopted in 1999 for all new employees and some long-time employees. Cash balance plans, which mushroomed in popularity in the 1990s, award benefits at a steady rate through a worker’s tenure. They are different from traditional pension plans, which reward workers for staying with a company over time. Such plans often make employees’ last years with the company the time when their eventual pension increases the most. IBM announced the deal after the end of regular trading. Its shares closed at $84.98, up 50 cents, then gained 4 cents in extended trading. Copyright 2004 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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