WASHINGTON -- In May, IBM employees who've so far convinced the federal courts that their company's pension cutbacks illegally discriminate against older workers struck a settlement deal under which the technology giant could pay out as much as $1.7 billion.

In June, a House committee decided it would settle the long-running argument over converting traditional pensions into less generous cash-balance plans differently: With the stroke of a pen, the committee changed the definition of age discrimination.

And it put corporations on notice -- even those still facing challenges in court -- that if they acted quickly to conform to the ``new'' discrimination rules, damages against them could be capped. With friends in Congress, who needs to worry about losing a lawsuit?

Rep. John Boehner, R-Ohio, chairman of the House Committee on Education and the Workforce, calls cash-balance plans ``the future of the defined-benefit system.'' He derides the lawsuits brought by middle-aged and older workers who've lost billions in promised pension benefits because their companies converted to cash-balance systems. The suits, he says, are creating too much uncertainty and ``jeopardizing generous pension benefits for workers across the country.''

Certainly the lawsuits jeopardize one of corporate America's sharpest tools for cutting its financial promises to longtime workers.

Under traditional defined-benefit pensions, a worker's benefit is based on years of service and a financial formula that gives greater weight to pay earned during an employee's final years of service. Under cash-balance plans, longevity isn't a factor and pension accruals are spread out evenly over the years. The effect of converting to ``cash balance'' plans on workers in their 40s and 50s is often severe. They lose the pension they'd been promised. Yet unlike their younger co-workers, they do not have enough years left to work to make up for their loss under the new system. The difference in the way older employees and younger workers are treated in the conversions is the basis for the age discrimination suits.

Employers knew that the law governing pension plans has clear rules concerning the treatment of older workers, says Eva Cantarella, a Michigan pension-law specialist who has represented employees in cash-balance cases. They went ahead anyway. ``Now they're saying 'help, come save our fannies,''' she says.

Boehner to the rescue. He tucked language into a larger pension-reform bill that would, in essence, legalize future cash-balance plans by changing the rules on what constitutes age discrimination. The measure has not come before the full House for a vote. But if Boehner's legislation does pass, companies still tied up in court because of past conversions could have their damages capped. Even if workers won they would somehow lose. ``It indirectly sanctions conduct that was previously considered illegal,'' says Cantarella.

Under this new and supposedly improved system, older workers who started out covered by a traditional plan couldn't fight back. ``Legal harassment of these retirement plans needs to stop,'' Boehner says.

Just who's being harassed?

By and large, companies that converted their pensions weren't fretting over the health of their traditional pension funds. They were figuring out how to boost the corporate bottom line.

Documents that surfaced in the IBM suit show that executives there considered the conversion a cost-cutting measure that would save $2 billion over a decade. But they simultaneously worried about how the pension reductions would affect upper management. They plotted more generous 401(k)s and creation of a supplemental pension system for executives. The rich are (still) different from you and me.

And different, too, in the audacity of the swagger they display on Capitol Hill. Months ago, after hundreds of middle-class workers who had been affected by cash-balance changes swarmed Congress demanding action to end what they consider the theft of their pensions, a proposed Bush administration regulation that would have made the conversions legal was blocked. Negotiations over administration-backed legislation didn't get far.

But there is nothing that focuses the lobbyist mind like a proposed $1.7 billion settlement. It could, after all, signal to all the other judges hearing all the other lawsuits that people have indeed been wronged. Reparations, it would seem, might be in order.

Desiring to escape such a demand for accountability, business lobbyists turned to those who know best how to avoid being called to account. If the facts and the law aren't on their side, they can always find a lawmaker who is.




Marie Cocco's e-mail address is mariecocco(at symbol)washpost.com.