06- 4757- cv ( L)

H i r t v . T h e Equi t abl e, B r y er t on v . V er i zon 1 U N IT E D S T A T E S C O U R T O F A P P E A LS 2 F OR THE S EC OND C IR C U IT 3

_______________ 4 August Term, 2007 5 (Argued in Tande m: April 22, 2008 Decide d: J uly 9, 2008) 6 D o c k e tN o . 0 6

- 4 7 5 7

- c v( L) 7 Do c ke t N o. 06 -5 19 0- c v ( XA P) 8 Docke t No. 07-1680-c v 9

________________________________________________________ 10 STEFANI E HI RT, BARB ARA SEAY, ANN NUSSBAUM, SUSAN CHWAST and L ORETTA 11 RONZ CA, 12 Plaintif fs-Appellants-Cross-Appellees , 13 —v.— 14 THE EQU I TAB L E RETI REMENT PL AN F OR EMPL OYEES, MANAG ERS AND AGENTS 15 and THE O FF I CERS COMMI TTEE ON B ENEF I T PL ANS, as Plan Administrator, 16 De fe nd an ts- Ap pe lle es- Cro ss-

Ap pe lla nts

. 17

________________________________________________________ 18 MARGARET BRYERTON , CHERYLA. B ROCK, MARK A. FERRAI OL O and MI CHAEL 19 CU B B I NS, 20 Plain tif fs- Ap pe lla nts , 21 —v.— 22 VERI Z ON COMMUNI CATI ONS, I NC., VERI Z ON MANA GEMENT PENSI ON PL AN and 23 VERI Z ON EMPL OYEE B ENEF I TS COMMI TTEE, 24 Defendants-A ppellees

. 25

________________________________________________________-2- 1 B e f o r e : J A COBS , Chief Judge , KEARS E and K ATZ MANN , Circuit Judges

. 2

_______________ 3 4 Plaintiffs in two separate ca ses brought claims alleg ing that “ca sh balanc e” de fined 5 benef

it plans violated the Employ ee Re tirement Income Sec urity Act’s r ule ag ainst ag e-ba sed 6 reduc tions in t he rate of be nefit ac crua l, 29 U.S.C. § 1054(b)(1)(H )(i) ( 2005), as that r ule exist ed 7 prior to the ame ndment that took effe ct as of June 29, 2005. The United States D istrict Court for 8 the Southern District of Ne w York ( Heller stein, J. ) d ism iss e d th e c la im o n s umm ary jud g me nt i n 9 06-4757 and 06- 5190. In the other c ase, 07- 1680, the United States District Court for the 10 Southern District of Ne w York ( Chin, J. ) dismissed the claim pursuant to Rule 12(b) (6) of the 11 F e de ra l Ru le s o f C ivi l Pr oc e dure . Pl a int if fs in b oth c a se s a pp e a le d, and

we he ard the a pp e a ls i n 12 tandem. We AF F IRM the jud g me nts of the dis tr ic t c ourt s: C a shba lanc e pla ns do no t inhe re ntl y 13 result in an ag e-ba sed re duction in the rate of bene fit acc rual.

14

_______________ 15 E D G A R P AUK , New Y ork, NY for Hi rt P lai nti

ffs -A pp e lla nts -C

ro ss16 Ap pe lle es 17 E LI G OT TES DI ENER , Gottesdiener L aw F irm, PL L C, Brookly n, NY 18 for Br y e rto n P lai nti

ffs -A pp e lla nts 19 20 KEN NE TH S. G ELL ER (Craig W. C anetti, on the brief

), Mayer, 21 Br own, Rowe & Maw L L P, W ashing ton, DC, W ilber H. B oies and 22 Nanc y G. Ross, McDer

mott, W ill & Emery

L L P, Chi cag o, I L , and 23 Mark D. Winc e k, Ki lpatr ic k St oc kto n L L P, Wa sh ing ton , D C for 24 TheEq uit ab leDe fe nd an ts- Ap pe lle es- Cro ss-

Ap pe lla nts 25 J EF F R EY G. H U V ELLE (Eric R. Sonnenschein, on the brief ), 26 Covington & Bur ling L L P, W ashing ton, DC for Verizon 27 De fe nd an ts- Ap pe lle e s 28 Ke nt A . M a so n a nd Jaso n K . B or

tz, D avis & Ha

rm an L L P, 29 Was hin g ton , D C for Am ic i Cu ria e Am e ric an Be ne fit s Co un c il, 30 AT& T Cor p. , B us ine

ss R ou nd tab le , B P A me ric a I

nc ., El Pa so 31 Corporati on, Honey well International Inc., Me rcer Hum an 32 ResourceConsulti ng, Inc., W atson W yatt W orldwide, and Xerox 33 Corporati on 34-3- 1 Caro l Co nn or F low e and

Gr e tc he n D ixon, Ar e nt F ox L L P, 2 Washington, DC, and Robin S. Conrad and Shane Br ennan, 3 Natio na l Ch ambe r L iti g atio n Ce nte r, Was hin g ton , D C for Amicus 4 Curiae Chamber of Commerceof the United States of America 5 J eff rey L ewis and V incent Cheng , L ewis, F einber g , L ee, Re naker 6 & Jackson, P.C., Oakland, CA, Stephen R. B ruce and Al lis on C. 7 Caalim, Stephen R. Bruc e L aw Of fice s, Washington, DC, Ly nn 8 L inc oln Sark o, De re k L oe se r, Amy Willi ams- De rr

y , a nd Ka ri n 9 Swo pe , K e lle r R ohrb a c k, L L P, Se attl e WA, and Ma ri ssa M. 10 Tirona, National Employ ment L awyers Assoc iation, San Fra ncisco, 11 CA, for Amicus Curiae National Employme nt Law

yers Assoc iation 12 Eli Gottesdiener, G ottesdiener L aw F irm, PL L C, Brookly n, NY for 13 Amicus Curiae Pension Rights Center 14 15 J eff rey P. Engla nder, Mor rison Cohen L L P, New Yor k, NY for 16 Amicus Curiae Y oung W omen’ s Christ ian Association Retirement 17 Fund, Inc. 18

_______________ 19 K

ATZ MANN , Circuit Judge : 20 In 2006, Congr ess ena cted the Pension Protec tion Act (“PPA”), which amende d the 21 Em

plo y e e Re tir e me nt I

nc ome Se c ur ity

Ac t of 19 74 (“ ERI SA” ) t o s pe c if ic a lly a llo w f or c a sh 22 balanc e def

ined bene fit plans. Pub. L . No. 109-280, § 701(a )(1) , 120 Stat. 780, 981 (2006). The 23 amendment, howe ver, a pplies only

to periods beg inning on or afte r June 29, 2005. Id. 24 § 7 01 (e )( 1) , 1 20 Stat. 9 91 . T his op ini on a dd re sse s tw o a

pp e a ls, bo th r a isi ngthe same iss ue : 25 wh e the r, pr ior

to Jun e 29 , 2 00 5, c a shba lanc e de fi ne d b e ne fi t pl ans ra n a fo ul o f t

he pr oh ibi tio n in 26 ERI SA § 20 4( b) (1 )( H) (i ) a g a ins t a g e -b a se d r e du c tio ns in t he rate of be ne fi t a c c ru a l. 2 9 U .S. C. 27 § 1 05 4( b) (1 )( H) (i ). Our c ha rg e is a lim ite d o ne -- to i nte rp re t th e re le va nt s tatut e , f

a ith fu l to 28 Congr ess’s mea

ning.-4- 1 Al l of

our s ist e r c ir c uit s th at ha ve c on sid e re d th is q

ue sti on have fo un d th at, e ve n p ri or to 2 amendment by

the PPA, ERI SA did not proscribe c ash bala nce de fined be nefit plans. Se e Druti s 3 v. Rand Mc

Nally & Co. , 4 99 F .3 d 6 08 (6 th C ir . 2 00 7) ; Register v. PNC Fin. Servs. G roup, Inc. , 4 477 F.3d 56 ( 3d Cir. 2007); Cooper v. IBM Personal Pension Plan , 457 F.3d 636 ( 7th Cir. 2006). 5 There has bee n some unce rtainty amongdistrict courts in this Ci rcuit, howe ver, c oncer ning 6 whether

our dec ision in Esden v. B ank of Boston , 229 F.3d 154 ( 2d Cir. 2000), dictates a nother 7 result. Compare In re Citigroup Pension Plan ERISA Litig. , 470 F. Supp. 2d 323, 341-45 8 (S.D.N.Y. 2006) ( concludingcash ba lance plans violate ERI SA § 204(b)(1) (H)) , In re J .P. 9 Morgan Chase Cash Balance Litig. , 460 F. Supp. 2d 479, 488 (S.D.N.Y. 2006) (same) , 10 Richards v. Flee tBoston Fin. Cor p., 427 F. Supp. 2d 150, 167 (D. Conn. 2006) ( same), and 11 Parsons v. AT& T Pension Benefit Plan , No. 3:06CV552, 2006 WL3826694, at *1 (D. Conn. 12 Dec . 26, 2006) (same), with Am ara v . Ci gn a Co rp ., 534 F. Supp. 2d 288, 318-20 (D . Conn. 13 2008) (c oncludingcash ba lance plans do not inherently violate ERI SA § 204(b)(1) (H)) , Custer v. 14 S. New England Tel. Co. , No. 3:05CV1444, 2008 WL22258, at *8-10 (D . Conn. J an. 25, 2008), 15 Bryerton v . Verizon Commc’ns Inc. , No. 06 Civ. 6672, 2007 W L1120290, at *4-5 (S.D.N.Y

. 16 Apr. 17, 2007) ( same), Laurent v. PriceW aterhouseCoopers LLP, 448 F. Supp. 2d 537, 552 17 (S.D.N.Y. 2006) ( same), and Hirt v. Equitable Ret. Plan , 441 F. Supp. 2d 516, 550 (S.D.N.Y. 18 2006) (same). We write toda y to clarify that we sha

re the view of c ash bala

nce pla ns put forth by 19 the Third, Six th, and Seventh Circuits: Even prior to the PPA, ca sh balanc e plans c ould survive 20 scrutiny

under ERI SA § 204(b)(1) (H)( i). 21 The pa

rties in Hirt v. Equitable Retireme nt Plan , 06-4757 and 06- 5190, raise a number-5- 1 of other a

rguments which we dispose of in a summary order also filed today . We theref ore 2 aff

irm both judgments below. 3 B ACKG ROUND 4 I. ERISA and Cash Balance Plans 5 ERI SA rec og nizes two basic ty pes of r etireme nt plans: “define d contribution plans” and 6 “def

ined bene fit plans.” Unde r ERI SA, a def ined contribution plan (a lso known as an 7 “individual acc ount plan”) is “a pension plan which pr ovides for a n individual account f

or ea ch 8 participa

nt and for be nefits base d solely upon the amount contributed to the pa rticipant’s 9 a c c ount, and

any inc ome , e xpe ns e s, g a ins and los se s. ” 29 U. S.C. § 1 00 2( 34 ). A 4 01 (k) p lan is a 10 common define d contribution plan. Any plan that does not mee t the definition of def ined 11 contribution plan is a def ined bene fit plan. 29 U.S.C. § 1002(35). We descr ibed the tra ditional 12 define d benef

it plan in Esden : 13 A c onve nti on a l de fi ne d b e ne fi t pl an[] a do pti nga fi na l- pa y fo rm ula wo uld c re dit 14 the e mpl oye e wi th a sp e c if ic pe rc e nta g e of

sa lary fo r e a c h ye ar o f e mpl oy

me nt. 15 For

instance, a

n employ ee mig ht acc rue a pension of 1.5% of

“sala ry” for ever y 16 y e ar o f s e rv ic e . A ft e r 3 0 ye ars of se rv ic e he wo uld

have a pe ns ion e qu iva le nt t o 17 45 % o f “ sa lary .” Sa lary may be de fi ne d a s f

ina l sa lary , o r t

he ave ra g e of

sa lary in 18 the last five year s. 19 229 F.3d 154, 158 n.4 ( 2d Cir. 2000). 20 Def

ined bene fit and def

ined contribution plans diffe r in who bea rs the risk of inve stment 21 perf

ormanc e. Where as def

ined bene fit plans g ener ally guara ntee a specific benef

it without 22 reg ard to how the marke t perfor ms, defined c ontribution plans gua rante e only

that the employ er 23 wi ll c ontr ibute to t he inv e stm e nt a c c ount. In d e fi ne d c ontr ibutio n p lans , “ [t]he e mpl oye e is 24 entitled ‘to whate ver a ssets are dedicated to his indivi dual ac count.’ The employ ee be ars theFor example, if an employ er c ontributed $5000 ea ch year to an employ ee’ s defined 1 contribution acc ount, that money may be invested. A t retireme nt, the employ ee w ould rec eive the a c tua l c onte nts of

the a c c ount ( i.e. , the value of the investments)-- not $5000 times the number of year s of employ ment. -6- 1 investment risks and the employer doe s not gua rante e a r etireme nt benef

it to the employ ee.” 2 Register v. PNC Fin. Servs. Group, Inc. , 4 7 7 F. 3 d 5 6 , 6 1 -6 2 (3 d

C i r. 2 0 0 7 ) ( qu o t i n g Hughes 3 Aircraft Co. v. Jacobson , 525 U.S. 432, 439 (1999)) ( internal c itation omit ted). 1 4 A ca sh balanc e plan is a r elatively new f orm of plan intende d to combine attributes of 5 both defined c ontribution and defined be nefit plans. In Esden , w e a lso de sc ri be d th e ty pic a l c a sh 6 balanc e plan: 7 Under

a ca sh balanc e pension plan, a hy pothetical ac count is established in ea ch 8 participa

nt’s name. B enef

its are c redited to that “ acc ount” over time, driven by 9 two varia

bles: (1) the e mploy er’ s hy pothetical “c ontributions,” and (2) 10 hy

pothetical ea

rning s expressed as intere st credits. Employ er “ contributions” ar e 11 us ua lly

e xpre sse d a s a

pe rc e nta g e of

sa lary , th e ra

te of wh ic h ma

y va ry wi th 12 employ ee te nure. Intere st credits may be at a fix ed intere st rate, but more often 13 they

are tied to an extrinsic index --f or example, U.S. Governme nt securities of a 14 sp e c if

ie d matur ity

-- and

the y va ry a c c or din g ly . E a c h ye ar a n e mpl oye e re c e ive s a 15 statement of he r “a ccount” balanc e, and c an ther efor e see the value of her pe nsion 16 benef

it. These fe ature s are desig ned to mimic the simpli city of a de fined 17 contribution plan. 18 22 9 F .3 d at 15 8. Th us , c a shba lanc e pla

ns are of te n d e sc ri be d a s “ hy

br id” : th e y

c re ate a be ne fi t 19 str

uc tur e that si mul ate s th at of de fi ne d c ontr ibutio n p lans , b ut e mpl oye rs do no t de po sit fu nd s in 20 actua l individual accounts, and e mploy ers, not employees, be ar the marke t risks. See, e .g. , W est 21 v. AK Steel Corp. , 484 F.3d 395, 399 ( 6th Cir. 2007). Be cause the individual acc ounts and 22 c ontr ibutio ns the re to a re me re ly fo r r e c or dk e e pin gpurp os e s ( and do no t a c tua lly

e xist) , c a sh 23 balanc e plans c onstitut e def ined bene fit plans under ERI SA. See E sden , 229 F.3d at 158 n.6.Under Equitable’s c ash bala

nce pla n, Equitable contributes “ pay cre dits” to eac h 2 participa nt’s hy pothetical ac count in the amount of 5% of annual c ompensation up to the participa nt’s Social Security

y ear ly benef its base, and 10% of the e mploy ee’ s compensation over that amount. The a ccount ba lance ear ns “intere st credits” c alculate d monthly at a r ate e stablished in advanc e ea ch year . The intere st rate is set to the ave rag e rate for one -y ear Trea sury Bills for the twelve- month period endingin November of the prior

y ear . -7- 1 II . H irt v . Th e Eq uit

ab le 2 Over

a four -y ear

period be g inning in 1988, The Equitable L ife Assura nce Socie ty

of 3 Am e ri c a

(“ Eq uit a ble ” ) c onve rt e d th e pe ns ion pla ns it o ff e re d to e mpl oye e s, mana g e rs , a nd a g e nts 4 from tra ditional defined be nefit plans to a sing le ca sh balanc e plan. On August 23, 2001, the 2 5 Hi rt plaintiffs filed a putative class ac tion alleg ing, inte r a lia , th at th e c a shba lanc e fo rm ula 6 violated ERI SA § 204(b)(1) (H)( i), which prohibited a pension plan fr om reduc ing the “rate of a n 7 e mpl oye e ’s be ne fi t a c c ru a l . . . b e c a us e of the atta inm e nt o f a

ny a g e .” 29 U. S.C. 8 § 1054(b)( 1)(H) (i). The district court ce rtified the c lass in 2003. Both sides moved for summary 9 judgme nt, and, in an orde r date d J uly 20, 2006, the district court rule d in favor of defe ndants on 10 the claim her e at issue, f inding “ it is clear that Equitable ’s plan does not re duce the rate of an 11 e mpl oye e ’s be ne fi t a c c ru a l be c a us e of atta inm e nt o f a

ny a g e . T he pla

n me re ly pr e se rv e s th e tim e 12 value of

money , and thus treats all participants equa lly .” Hirt v. Equitable Ret. Plan , 4 41 F. 13 Supp. 2d 516, 551-52 (S.D.N.Y. 2006) ( internal quotation marks omitted). Plaintiffs appe al that 14 deter

mination. 15 III

. Bryerton v . Verizon Communications 16 The Ve rizon Manag ement Pension Plan is a cash ba lance plan cove ringVer izon’s non17 union employ ees a nd the succ essor in intere st to, inte r a lia , the B ell Atlantic Cash B alanc e PlanParticipants with a combined a g e and year s of servic e under 35 rec eived monthly

pay 3 cre dits equal to 4% of monthly salary ; participants whose combined total was be tween 35 a nd 49 rec eived pa

y cre dits at 5% of monthly salary ; participants whose combined total was be tween 50 and 64 re ceive d pay

cre dits at 6% of monthly salary ; and par

ticipants with a combined total of 65 and a bo ve re c e ive d p ay

c re dit s at 7% of

monthl y sa lary . In a dd iti on , th e amou nt i n th e c a sh b al an ce ac co un tea rn ed(a n d co n t i nu es t o ea rn ) i n t er es tata u n i fo rm ra t e e qu al t o th e a v er age annual y ield on one-year

Trea sury bills pl us one per centa g e point, with the total limi ted to the yield on 30-y ear

Trea sury bonds. -8- 1 and the NY

NEX Cash B alanc e Plan. B oth the Be ll Atlantic Plan and the NYNE X Plan wer e 2 traditional define d benef it plans prior to their conve rsion to the cash ba lance method in 1996 and 3 1998, respe ctively . The Ve rizon P lan used a formula that de pended on the participa nt’s ag e and 4 y e ars of

se rv ic e to c a lc ulate pa

y c re dit s. On

June 30 , 2 00 6, Ve ri zonfr oze its pla n a s a c os t- 3 5 cutting me asure and par ticipants stopped acc ruingpay cre dits. P articipa

nts are still entitled, 6 howeve r, to bene fits acc rued pr ior to the fre eze, in addition to interest cre dits and other 7 adjustments. 8 The four

plaintiffs filed a putative class ac tion on September 1, 2006, alleg ing, inte r a lia , 9 that by

operation and desig n the Ver izon pl an violated ERI SA § 204(b)(1) (H) f or the pe riod prior 10 to J une 29, 2005, the e ffe ctive date of the ERI SA amendment spec ifically allowingcash ba lance 11 plans. Plaintiffs therea fter move d for c lass cer tification and a

ppointment of class counse l, and 12 defe ndants moved to dismiss t he complaint. In an orde r date d April 17, 2007, the district court 13 dismiss ed the c omplaint, ruling “ the Plan does not violate § 204(b) (1)( H)(i) of ERI SA.” 14 Bryerton v . Verizon Commc’ns Inc. , No. 06 Civ. 6672, 2007 W L1120290, at *5 (S.D.N.Y. A pr. 15 17 , 2 00 7) . T he dis tr ic t c ourt de nie d th e mot ion

fo r c la ss c e rt if

ic atio n a nd a pp ointme nt o f c la ss 16 counsel a s moot. P laintiffs appe al the dismissal of their cla im.A par allel provision appea rs in the Interna l Revenue Code. See 26 U.S.C. § 4 411(b)( 1)(H) (i). -9- 1 D I S CUS S I ON 2 We review de novo both the dismiss al of a claim pursuant to F ed. R. Civ. P. 12(b)(6) and 3 the dismissal of claim on summary judgme nt. See, e .g. , McCarthy v . Dun &Bradstreet Corp. , 4 482 F.3d 184, 191, 202 ( 2d Cir. 2007). Althoug h the two ca ses bef ore us on a

ppeal pr esent 5 differ ent proc edura l postures, they turn on the identica l issue of law: whe ther a cash ba lance plan 6 can be rec onciled with ERI SA § 204(b)(1) (H)( i). 7 ERI SA § 204 provides that “a define d benef

it plan shall be treated as not satisfying the 8 require ments of this paragraph if, unde r the plan, a n employ ee’ s benef

it accr ual is cea sed, or the 9 rate of an e mploy ee’ s benef it accr ual is reduc ed, bec ause of the attainment of a

ny ag e.” 29 10 U.S.C. § 1054(b)(1)( H)(i)

. The district cour t in Richards v. Flee tBoston Financial Cor poration 4 11 se t f

or th t he argume nt t

hat, p ri or to t he e ff e c tiv e date of

the PPA , c a shba lanc e pla ns vio late d th is 12 provision: 13 In a par

ticular qua

rter, g iven two employ ees who are identically situated except 14 for their

ag es, the Ame nded Plan neve r allocates a smaller cash va lue to the older 15 employ ee’ s hy pothetical ac count than that allocated to the young er e mploy ee’ s 16 hy

pothetical ac count. . . . [However ,] an older employ ee r ece iving the sa me dollar 17 amount of contribution to her c ash bala nce a ccount in a g iven quar ter a s that 18 rec eived by a young er e mploy ee buy s a smaller a g e-65 pe nsion annuity with that 19 mon e y . T his ph e no me no n o c c ur s b e c a us e the old e r w or

ke r i s c los e r t o r e tir e me nt, 20 so the money contributed to her

hy pothetical ac count has less time to ea rn annua l 21 interest cr edits under the pla n than does the mone y

contributed to the young er 22 worke r’s a ccount. 23 427 F. Supp. 2d 150, 162-63 (D . Conn. 2006). Thus, the Hi rt plaintiffs argue, “a s a matter of 24 simple arithmetic . . . the rate at which pa rticipants ea

rn their pe nsion decre ases with adva ncing-10- 1 ag e.” 2 Plaintiffs’ “simple arithmetic” depends on me asuringthe “r ate of benef it accr ual” by 3 ref ere nce to the e nd product-- the ag e-65 a nnuity that can be purcha sed with the ac count balanc e-- 4 instead of the pe riodic dee med contribution there to. This is t he appr oach taken by the district 5 courts in this Circuit that have invalidated c ash bala nce pla ns. See In re Citigroup Pension Plan 6 ERISA Litig. , 4 70 F . Su pp . 2 d 3 23 , 3 42 -4 3 ( S.D .N .Y . 2 00 6) ; In reJ .P . M or ga n Ch as e Cas h 7 Balance Litig. , 4 60 F . Su pp . 2 d 4 79 , 4 86 -8 8 ( S.D .N .Y . 2 00 6) ; Richards , 427 F. Supp. 2d at 164- 8 65 . We de c lin e to e nd or se thi s r e a din g , f ind ingours e lve s in

a g re e me nt w ithe ve ry

c ir c uit c ourt to 9 consider the question: “The be tter view . . . is that the ‘ rate of bene fit acc rual’ r efe rs to the 10 employ er’ s contribution to a plan, and ther efor e any differ ence in output as a result of time and 11 compound intere st does not violate § 204(b)( 1)(H) (i).” Drutis v. Rand McNally &Co. , 499 F.3d 12 60 8, 61 4 ( 6th

Cir . 2 00 7) ; se e als o Register v. PNC Fin. Servs. G roup, Inc. , 477 F.3d 56, 68 ( 3d 13 Cir. 2007); Cooper v. IBM Personal Pension Plan , 457 F.3d 636, 639 ( 7th Cir. 2006). 14 In arguing f or an output-or iented eva luation of the rate of be nefit ac crua l, plaintiffs 15 e mph a size ERI SA’ s d e fi nit ion of the sim ila

r t e rm , “ a c c ru e d b e ne fi t” : 16 The ter

m “ac crue d benef

it” means-- 17 (A ) in t he c a se of a de fi ne d b e ne fi t pl an, the ind ivi du a l’ s a c c ru e d b e ne fi t 18 deter mined under the plan and . . . e x presse d in the form of a n annual 19 benef it commencingat normal re tirement ag e, or 20 (B ) in the case of a pla n which is an individual ac count plan, the ba lance of the 21 ind ivi du a l’ s a c c ount. 22 29 U. S.C. § 1 00 2( 23 ). B e c a us e ERI SA m e a sure s “ a c c ru e d b e ne fi t” by re fe re nc e to t

he ult imate 23 retire ment-ag e annuity , plaintiffs claim, we should apply the same te st to our consideration of-11- 1 “bene fit acc rual.” Plaintiffs rely on the district court’s r easoningin Richards : 2 In light of the g reat simi larity that [“rate of

benef it accr ual”] bear s to the 3 statutorily

define d term “a ccr

ued bene fit,” and the fac t that ERI SA require s 4 acc rued be nefit to be mea sured a s an annua l benef it commencingat normal 5 retire ment ag e for define d benef

it plans, but requires a ccr ued bene fit to be 6 me a sure d a s th e ba lanc e of an in div idu a l’ s a c c ount f or de fi ne d c ontr ibutio n p lans , 7 the te rm

“ rate of be ne fi t a c c ru a l,” a s u se d in se c tio n 2 04 (b )( 1) (H )( i) , r e fe rs to r ate 8 measure d as a c hang e in the annua l benef it commencingat normal re tirement ag e. 9 The statute is unambiguous in this respect . . . . 10 427 F. Supp. 2d at 164-65. 11 B ut C on g re ss d id n ot u se the te rm “ a c c ru e d b e ne fi t” wh e n it dr a ft e d E RI SA 12 § 204(b)( 1)(H) (i); rather, Cong ress used the term “r ate of benef it accr ual.” “ When Congre ss uses 13 pa

rt ic ula r l angua g e in o ne se c tio n o f a statut e and

dif fe re nt l angua g e in a

no the r, we pr e sume its 14 word c hoice wa s intentional.” United States v. Pe terson , 394 F.3d 98, 107 ( 2d Cir. 2005). Had 15 Congr ess meant to incor porate the conc ept of the r etireme nt-ag e annuity into § 204(b)(1)( H)(i) , 16 Congr ess could have draf ted it to refe renc e the de fined ter m, “ac crue d benef

it.” Indeed, the 17 imm e diate ly

pr e c e din gsu

bs e c tio n, ERI SA § 20 4( b) (1 )( G) , d oe s e xac tly that: “ a de fi ne d b e ne fi t 18 plan shall be tre ated a s not satisfying the require ments of this paragraph if the participa nt’s 19 ac c ru e d b e ne

fit is r e du c e d o n a c c ount o f a ny inc re a se in h is a g e or

se rv ic e .” 29 U. S.C. 20 § 1054(b)( 1)(G) (empha sis added). Cong ress kne w how to re fer ence acc rued be nefit. L ike the 21 Supreme Court in Russello v. United States , we “ ref rain fr om concludinghere that the diffe ring 22 languag e in the two subsec tions has the same mea ning in e ach. We would not pre sume to ascr ibe 23 this differe nce to a simple mist ake in dr aftsmanship.” 464 U .S. 16, 23 (1983). 24 In support of the position that ERI SA § 204(b)(1) (H) should be considere d in terms of 25 output rather tha

n input, the district court in J .P . M or ga n Ch as e listed dictionary definitions for-12- 1 “bene fit” and “ acc rual.” 460 F. Supp. 2d at 486. B ut we think the cour t also should have 2 c on sid e re d th e me anin gof the te rm “ ra te ,” a s § 20 4( b) (1 )( H) (i ) o utl aws a g e -b a se d r e du c tio ns in 3 the rate of bene fit acc rual. In this contex t, rate c arr ies with it a temporal limitation: One cannot 4 evaluate a r ate of

acc rual without controllingfor the pa ssag e of time. Thus, the f act that the 5 ult imate be ne fi t mi g ht gro w t o b e larg e r f or y oung e r e mpl oye e s- -who have mor e tim e until 6 normal re tirement ag e than their older c ounterpa

rts--would not be r eleva

nt to the comparison of 7 acc rual rates. As the Supreme Court has instructed, “ [a] reduc tion in tot al bene fits due is not the 8 same thingas a r eduction in the rate of be nefit ac crua l; the former is the final outcome of

the 9 calc ulation, where as the latter is one of the f

actor s in the equation.” Lockhee d Corp. v. Spink, 10 517 U.S. 882, 897 (1996). 11 Although w e find the statute una mbiguous, we note brief

ly that the leg islative history of 12 ERI SA § 204(b)(1) (H) r einforc es this rea ding. A s orig inally enac ted in 1974, ERI SA did not 13 re qu ir e that a

pe ns ion pla n a llo w e mpl oye e s who wo rk e d b e y on d n or ma l r e tir e me nt a g e to 14 continue ea

rningadditional pension bene fits. See H.R. Conf. Rep. 99-1012, at 378, as reprinted 15 in 1986 U.S.C.C.A.N. 3868, 4023 (1986). Cong ress amended ERI SA to add § 204(b)( 1)(H) as 16 part of the Omnibus Budg et Reconc iliation Act of 1986, Pub. L . 99-509, § 9202, 100 Stat. 1874, 17 1975. Section 9202 of the a ct, which e ffe cted this cha ng e, wa s titl ed “B enef

it Accr ual B eyond 18 Normal Retire ment Ag e.” Id . In addition, the Confere nce Re port descr ibes the bill as amending 19 ERI SA “to require a plan to provide for be nefit ac crua ls and contributions with respec t to an 20 employ ee’ s y ear s of plan par ticipation after

normal re tirement ag e.” H .R. Conf. Rep. 99-1012, at 21 376, as reprinted in 1986 U.S.C.C.A.N. at 4021. In other wor ds, Congr ess soug ht to prohibit t heThe PPA amende d ERI SA to remove the whipsaw ef fec t and allow ca sh balanc e plans 5 to make lump sum distribut ions equal to the amount expressed in the be nefic iary ’s hy pothetical acc ount. Se e ge ne ra lly W est v. AK Stee l Corp. , 484 F.3d 395, 401- 02 (6th Cir. 2007).

-13- 1 cre ation of pension “c liffs” fr om which 65-year -old worke rs could fa ll. Given that Congr ess was 2 c on c e rn e d w ithwh at ha pp e ns to a

wo rk e r’ s r e tir e me nt b e ne fi ts after no rm a l r e tir e me nt a g e , it 3 makes little sense to look to the ac crue d benef it--i.e., the a

nnual bene fit commencingat normal 4 re tir e me nt a g e -- a s a re fe re nc e po int

in e va luatin gwh e the r t

he re ha s b e e n a

re du c tio n in

the rate 5 of bene fit of ac crua l. Thus, the leg islative history is fully consistent with the plain meaningof 6 the statute. 7 Plaintiffs also sugg est that our dec ision in Esden dictates a differ ent re sult. W e disag ree . 8 In Esden we a ddresse d ERI SA § 204(c)( 3), which r equire s that lump-sum dist ributions mustbe 9 the “a ctuar ial equivalent” of an “ annual be nefit . . . commenc ing at normal retire ment ag e.” 29 10 U.S.C. § 1054(c)(3) . We upheld the position put forth by the Interna l Revenue Ser vice ( “I RS”) 11 that “ the be ne fi ts attr ibuta ble to i nte re st c re dit s a

re a c c ru e d b e ne fi ts” and

c on se qu e ntl y 12 “nonfor feitable .” Esden v. B ank of Boston , 229 F.3d 154, 166 ( 2d Cir. 2000). Thus, we 13 conclude d, for the pur poses of a lump-sum dist ribution, in projectinga ca sh balanc e ac count’s 14 value out to normal re tirement ag e, a c ash bala nce pla n must use the interest rate provided unde r 15 the plan, eve n wher e that intere st rate e x cee ds the statutory discount rate use d to determine the 16 pr e se nt v a lue (a

ph e no me no n c omm on ly

re fe rr e d to a s “ wh ips a

w” ). Un lik e ERI SA 5 17 § 204(b)( 1)(H) (i), the statutory provision at issue in Esden specific ally ref ere nces “ acc rued 18 benef

it” and “nor

mal retire ment ag e.” T hat future interest cr edits must be included in a 19 § 2 04 (c )( 3) dis tr ibutio n, wh ic h d e pe nd s o n th e no rm a l- re tir e me nt- a g e be ne fi t, d oe s n ot d ic tatePla int if fs a lso make muc h o f C on g re ss’ s u se of dif fe re nt w or din gin t

he de fi ne d b e ne fi t 6 and def ined contribution anti-discrimination provisions. ERI SA § 204(b)(2) (A) states, “[a] define d contribution plan satisfies the re quirements of this par agraph if, unde r the plan, allocations to the employ ee’ s acc ount are not cea sed, and the rate at which amounts are a llocated to t he e mpl oye e ’s a c c ount i s n ot r e du c e d, be c a us e of the atta inm e nt o f a

ny a g e .” 29 U. S.C. § 1 05 4( b) (2 )( A) . Pl a int if fs su g g e st that in

us ingan in

put- or ie nte d e va luatio n o f “ rate of be ne fi t acc rual” we a

re a ctually

applying the anti-discrimination provision that g overns de fined contribution plans, in contrave ntion of Esden ’s admonition that “[h] oweve r ‘hy brid’ in desig n a cash ba lance plan may

be, it rema ins subject to a re gulatory framework that is in m any reg ards rig idly binary .” Esden , 229 F.3d at 158 n.6. We find plaintiffs’ argument unavailing . “To say that define d-bene fit and def ined-c ontribution plans are g overne d by differ ent subsections of ERI SA is not t o say

that what is lawful f

or one must be f

orbidden to the other .” Cooper , 457 F.3d at 641.

-14- 1 that they

must be prospec tively

included in our c onsideration of the “rate of be nefit ac crua l,” 2 wh ic h d oe s n ot. 6 3 Fundamentally , Esden was a case in which we de fer

red to the I RS’s ex plicit interpretation 4 of ERI SA and the Interna l Revenue Code. We he ld, “[t] he IRS’s consistent int erpr etation of the 5 statutes and its own regulations is reasonable and is entitled to defe renc e. . . . [T] he district cour t 6 err ed in g iving e ffe ct to the terms of the plan rather than e nforc ing the statutory and re gulatory 7 scheme as authoritatively interpre ted by

the I RS.” Esden , 229 F.3d at 159. The I RS’s 8 interpre tation of the re levant statutes appe are d in Trea sury Regulations and Notice 96- 8, in which 9 the I RS applied the regulations requiringplans to project hy pothetical bala

nces to norma l 10 retire ment ag e, notwithstanding the whipsaw e ffe ct. Our a naly sis was as follows: “Althoug h the 11 I RS’ s guid anc e on ho w the e xistin gre gulator y fr ame wo rk

a pp lie s to c a shba lanc e pla ns c ome s in 12 a No tic e , r athe r t

ha n in ne w r e gulatio ns or

a re ve nu e ru lin g , s uc h a

c on sis te nt a

nd re a so na ble-15- 1 interpre tation by

the re sponsible ag ency

is entitled to defer ence , reg ardle ss of its form of 2 publication.” Id . at 169. In this case, by contra st, plaintiffs direct us to no “c onsistent and 3 rea sonable interpr etation” f rom the I RS espousing their position. Unlike in Esden , h e re the re is 4 no thi ngto whic h w e c an d e fe r, and the statut or

y langua g e is c on sis te nt w ith , in de e d it c omp e ls, 5 th e r e s u l tw e r e a c ht o d ay. 6 We rec og nize that underlying the parties’ leg al ar guments are policy differ ence s, and we 7 a pp re c iate that th e matte r at ha nd imp lic ate s p oli c y

iss ue s. Pol ic y

de te rm inatio ns are the do ma in 8 of the e lected br anche s, not the courts. Our ta sk is lim ited to analy zing the statutory

scheme , and 9 to adher ing to Cong ress’s pur poses and mea

ning. 10 In sum, we join the Third, Six th, and Seventh Circuits and hold that ca sh balanc e def ined 11 benef

it plans do not by

definition violate ERI SA’s prohibition ag ainst ag e-ba sed re ductions in the 12 rate of bene fit acc rual, e ven as that prohibition ex isted prior to amendme nt by the PPA.

13 C ONCL US I ON 14 For

the re asons set for

th above, a

nd for the a dditional reasons discussed in our 15 acc ompanying summar y order , we AF FI RM the judgments of the district courts in both case s.