January 6, 2006

Big Blue Makes Some Feel the Big Blues

Posted in Politics at 5:11 pm by antonello

IBM announced the end of its pension scheme today. IBM boasted the country’s third largest pension plan with $48 billion of assets. Most certainly another dark day in what has already been a bad winter for defined benefit plans. Some important excerpts from the NY Times article:

IBM’s pension funds were solvent, the move is simply a cost-cutting move.  In the words of the Times:

I.B.M., which competes against other technology companies that in general rely exclusively on 401(k) plans, said that the move fit into a broader strategy aimed at avoiding financial risk to its long-term future.

Note IBM is cutting pensions to avoid financial risk to its long-term future. Contrast with its employees who, by moving to a defined contribution scheme, will be incurring financial risk in their long-term future.

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1 Comment »

  1. […] I’ve seen this headline everywhere the last few days. On Thursday, I think it was, all IBM employees got an email notifying us of a change to IBM’s retirement plans effective in 2008. IBM also made a press-release, which all the of news organizations translated into the headline “IBM Freezes Pension Plan” making it sound like it is this terrible thing that is going to make a bunch of 55 year olds live a life of poverty because IBM took their pension away. And, after reading the headlines, this is exactly how most of the public seems to have interpreted the news (a number of posts from the blogosphere): From “Life’s Journey” Looking at today’s headlines about IBM freezing their pension plan sent chills up and down my spine. How can all these companies be allowed to do this? When you work for a company your whole life, they shouldn’t be allowed to tell you after the fact that your pension will stop. From “erinelisabeth’s blog” (a child of an IBMer): ibm’s freezing its pension plans in 2008. that’s where my dad works, and has worked for about 31 years. what will happen if he doesn’t retire before then? yikes. From “Meander”: IBM announced the end of its pension scheme today. IBM boasted the country’s third largest pension plan with $48 billion of assets. Most certainly another dark day in what has already been a bad winter for defined benefit plans. […]


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