A retiree=s Awhipsaw@ claim against a cash-balance pension plan arises when the plan provides a retirement benefit at an interest rate greater than the rate the law specifies for determining the present value of the benefit

A retiree=s Awhipsaw@ claim against a cash-balance pension plan arises when the plan provides a retirement benefit at an interest rate greater than the rate the law specifies for determining the present value of the benefit. An example of this sort of claim is the AK Steel retirees= class action B West v. AK Steel Corp. Retirement Accumulation Pension Plan B in which Sandra Beckwith, Chief Judge of the Southern District of Ohio, decided in February of this year that retirement benefits totaling $46 million were owed 1,230 retirees of AK Steel, headquartered in Middletown, Ohio.

Judge Beckwith=s decision in the West case is in the mainstream of the federal jurisprudence enforcing the pension rules on cash‑balance plans. Three federal courts of appeal B the Second, Seventh and Eleventh B have addressed the whipsaw issue in cash‑balance‑plan benefit calculations, each holding B as did Judge Beckwith in West v. AK Steel B that a plan participant=s hypothetical account balance must be projected to normal retirement age using the plan's interest crediting rate, converted to an annuity, and then discounted to a lump sum using the section 417(e) interest rate, thus producing the Awhipsaw@ benefit still owed the retiree. Berger v. Xerox Corp. Retirement Income Guarantee Plan, 338 F.3d 755 (7th Cir. 2003); Esden v. Bank of Boston, 229 F.3d 154 (2d Cir. 2000), cert. dis'd, 531 U.S. 1061 (2001); Lyons v. Georgia‑Pacific Salaried Employees Retirement Plan, 221 F.3d 1235 (11th Cir. 2000), cert. denied, 532 U.S. 967 (2001). In an opinion issued in May 2006 B Miller v. Xerox Corp. Retirement Income Guarantee Plan, No. 04‑55582, 2006 U.S. App. Lexis 11369 (9th Cir. May 8, 2006) B the Ninth Circuit effectively joined the Eleventh, Second and Seventh Circuits in holding that a cash‑balance plan must satisfy ERISA with respect to both defined benefit and defined contribution plans, including ERISA's requirement that there be actuarial equivalence between a distribution and the accrued benefit it replaces, presuming the correctness of the analysis for both Berger and Esden.