00-2613, 00-4075, 01-1126 White v. Sundstrand Corp.

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“[Unless an employer] is trying to encourage early retirement (which it isn’t) why would Sullair want a pension plan that rewards employees for quitting? Cf. McNab v. General Motors Corp., 162 F.3d 959 (7th Cir.1998). Employers can structure their plans to make it worthwhile for employees to leave, but firms usually want to encourage employees who have developed valuable skills and knowledge to remain – and, not incidentally, encourage them to develop such firm-specific skills in the first place. Back-loading of compensation (through salary that generally increases with age as well as through defined-benefit pension plans) is a principal way to do this. See Edward P. Lazear & Robert Moore, Pensions and Turnover, in Pensions in the U.S. Economy 163-87 (Zvi Brodie, et al., eds.1988); Edward P. Lazear & Sherwin Rosen, Pension Inequality, in Issues in Pension Economics 341 (Zvi Brodie, et al., eds.1987). Plaintiffs’ approach, by contrast, would produce a plan that treated workers staying through retirement age as suckers.

“The need to use a different calculation strategy (immediate-rate for those who retire immediately, deferred-rate for those who retire later) in order to achieve an economically identical outcome offers very strong support for the plan’s decision.”

Affirmed.

Appeals from the United States District Court for the Northern District of Illinois, Reinhard, J., Easterbrook, J.