IBM to freeze pension plan in 2008

The company expects to save billions of dollars by moving employees over to a 401(k) savings plan and freezing the existing plan from 2008. Together with changes proposed for 2006, which are under consideration in several other countries, IBM expects to cut worldwide retirement-related expenses this year by $450 million to $500 million. From 2006 through 2010, the company expects to cut costs by $2.5 billion to $3 billion.

The company has said that the move will not affect the 125,000 retirees, former employees with vested benefits or those who retire before January 1, 2008. For many of the more than 320,000 IBM employees worldwide, however, any hope of a guaranteed pension has been dashed by the announcement. Though the plan refers only to US workers, the company is known to be reviewing its pension schemes worldwide.

As of December 31, 2007, workers participating in the current defined benefit pension plan would stop accruing new benefits, with the pension being effectively frozen from that point. In January 2008, all US employees will receive a so-called enhanced 401(k) savings plan. IBM plans to double the current company match up to 6 percent of salary and to make additional automatic contributions of 1 percent to 4 percent of employees’ pay. In this way, IBM claims to be able to ensure 100 percent participation in the plan.

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http://www.wsws.org/articles/2006/jan2006/ibm-j07.shtml