IBM UK has shelved its "final salary" pension plan, pulling this prime benefit out from under about 28 per cent of its workforce. With an email sent to employees at about 5:30pm UK time - after most employees had likely gone home for the day - IBM UK and Ireland general manager Brendon Riley announced the end of the company's …
Now is absolutely the best time for a pension scheme to invest, the market is at the bottom and will only go up, why close a pension scheme now? This is cruel and idiotic, if this happened to me, I'd be expecting a very large raise in my salary to compensate.
I didn't notice any mention if the management have the same scheme as the workers? If not, is that one closing too?
It is simply not the case that DC pensions are too expensive to run, you just have to fund them constantly and not take payment holidays in the boom times as this is clearly idiotic and results in problems in the lean times.
What kind of pension plan do the executives get?
Do the IBM UK executives still have a defined benefit pension plan? I bet they do, in which case that's the kind of plan that the workforce are entitled to. End of story.
"But Big Blue is one of the few tech giants still churning out profits on par with with pre-Meltdown financials."
Isn't this proof that the 'profits' they're churning out are coming from short sighted cost cutting exercises, not from being the best?
As soon as the markets realize this, and the share price takes a dive, IBM will regret this kind of action - but it will all be too late for the loyal employees they've f***ed over.
Defined benefits plans
are unreasonable. Basically, whether it's defined benefit or defined contribution, the company has to take the salary contributions of its employees and put them in a pension fund, which is then invested in such a way as to pay out the benefits in perpetuity. The differences with defined benefits are 1.) if you die soon after retirement, your family gets shafted (your benefit/contribution ration makes assumptions about your lifetime) and 2.) if the market fails, the company gets screwed.
Sure, the company with a defined-benefits pension fund which got wiped out by a market crash could have invested in very conservative funds with low volatility, but those also get low returns, so more of the employees salary would have to be siphoned off into the pension fund. Isn't it better to give the employees a choice of what to invest in? Whether to accept low returns for low risk, or to take bigger risks for bigger returns? Basically, there are companies which are supposed to know how to turn defined contributiosn into defined benefits - we call them mutual funds. If they screw up, at least they don't take innocent employees' jobs with them when they fail. Why should a company like IBM be forced to be involved in that business?
I had to sign a contract which outlined my benefits, including the Superannuation details. Is IBM effectively trying to re-write the contracts? If so, they may find themselves the subject of many, many lawsuits.
Yes, I can understand them going "new employees no longer get this option for their super", but they may be on a slippery slope with existing employees.
I am pleased IBM UK has taken this sensible action, ensuring the continued payment of my final salary pension.
Grabbing an early retirement package was a great move, which also enabled me to take my pension at 50 (unless you were born on the 6th of a month, but thats another matter).
Whats even better, I never put a bean into any scheme.
So the only people who will have a nice retirement are the senior bosses and the public sector. I'm guessing the rest of us will be called "slaves" and will work for nothing to pay for the above plus their client base.
~Time to leave?
Pension != Big Blue
Let me start with saying that this a betrayal towards its employees - employees who might have accepted other jobs for higher wages but... IBM had the better pension plan. Somehow this seems deceitful to me.
However, in BB's defense: "Earlier in his email, Riley blames the change on a "recent trends in the economic environment." But Big Blue is one of the few tech giants still churning out profits on par with with pre-Meltdown financials" - their pension plan has more to do with the stock market than with their profits, one might hope, it called "not putting all your eggs in one basket"
But that doesn't change the fact that it is treason towards their employees. Don't offer it to new-hires, but don't rob people from a pension who missed out on (possible) higher wage opportunities because of -basically- promised loyalty awards.
Grabbing All They Can Get
Companies around the world are seeing a golden opportunity to screw their employees. Most companies are freezing or reducing wage increases, which makes a huge difference to their bottom line for years going forward.
Scragging the pension plan is almost orgiastically good. Pension plans are increasingly becoming a thing of the past, anyway, and I think that as many companies as possible will be using the threat of layoffs to strongarm their employees into signing off on losing their pensions.
When the economy improves, of course, there will be hell to pay, as all the good employees will leave. The mediocre ones will remain, and take it in the shorts.
But the bottom line will look great, and the post-recession bonuses will be SWEEET!
Never believe IBM propoganda
On the one hand the company is continuing to make Pre GFC profits (of the back of record revenue), but on the other hand they are telling their employees that the GFC means they can't give payrises and have to remove benefits like this pension scheme. For some reason BB management think the employees won't notice this discrepancy (they obviously think we're all idiots... I guess we are if we stay).
What do you expect?
IBM wants you high costing wankers to quit and move on.
This way they can do an 'intra company' transfer of some poor Offshore bloke in to your role.
Why else do you think IBM can still make its profits.
Note: IBM revenues down, margins up it means that they're shafting their employees, except for the senior execs who'll be retiring in the next year or two ...
If I was on Wall St. I'd take a long negative look at IBM.
Chipping away at the costly onshore
The *stated position* is that attrition is too low and the way to get it up is to make it "less comfortable" for people to stay. i.e. when we shaft you its because we want you to leave.
As for the line in the story
"with an email sent to employees at about 5:30pm UK time - after most employees had likely gone home for the day"
made me laugh, its only the overpaid executive apparatchiks and assistant spreadsheet trolls who get to go home to their familiies.
The rest of us are stuck in hotels miles from home, sacrificing our real lives in exchange for chasing non existant pay rises which are dangled in front of us as part of the so called "performance culture". This year's performance culture invites us to *fight* for promotion this week even though there will be no pay rise associated with it. Mmmmm, no thanks.
What the hell are you people complaining about?
Have you looked at the plan they're replacing it with? You contribute 3%, and they will contribute 8%? 8 fricking %?!!!?! For everyone including new hires? And some people will get 10% from the company if they contribute 5%? I just snapped up a company pension plan that offered to match my contribution up to 4%! (I contribute 4, they contribute 4) Which is generally considered a excellent and generous plan. I'd kill for a plan like they're getting, and they're talking about quitting in protest. Suits me, I'll have their job, thanks.
Re: What the hell are you people complaining about?
@David Lucke - The people complaining are those who have been paying into the final salary scheme for 25+ years, who are due to retire within the next ~5 years. They will be royally shafted by this, not the new-comers.
I don't think anyone starting a pension these days would consider a final-salary pension, but 20 years ago the idea of a job for life was still very real.
Thin end of the wedge
To answer Mr 'WTF' up there - it's not about the deal on the table (I agree, 8% company contribution is great... even if not as great as the deal offered previously to switch...) it's about pulling the rug from under their loyal employees - these are, after all, by definition the people who joined the company when Lou Gerstner was at the helm, i.e. the ones who helped turn it's fortunes around.
How would you be feeling if, outside of your control or influence, your company executives turned around and said:
"Hey, David, you know that deal you signed up to when you joined the company and we promised to honor? Well, forget it, we've decided we need to make it look like we're making more profit so that the share price goes up and we can line our own pockets with stock options. But, don't worry, dear valued employee that you are, here's a nice yellow banana. Oh? You don't like bananas? Well - I know some mexicans that love 'em"
You miss the point that the deal they get, while it looks good in terms of what most companies give, is significantly worse that the deal that they had to start with. You also seem to miss that your pension is your pay, it is not a bonus, it is not a nice to have, it is part of your whole remuneration package and for it to be taken away or "renegotiated" is directly taking money from the employee.
Feel sorry for the oldies
The final salary pension was no longer available when I joined IBM in the late 1990s - my pension was/is at the mercy of the markets.
I was only with the company for three years, can't imagine how pee'd off I'd be if I joined as a mainframe monkey in the 60s/70s and now had the rug pulled out from under me!
It's no wonder that they didn't send the email until 5.30 (that is if they're still using Lotus Notes). ;)
Breach of Contract
Any legal minds want to explain why such a change of working conditions can be implemented unilaterally?
Of course, the reasoning may be that all those still on the C (?) Plan are so old they won't get another job elsewhere so will be unlikely to resign in protest. Those 28% of the workforce (with a pension plan) must all have more than 15 years of service as membership to the Final Salary schemes were all closed in the mid-90s.
They do it because they can
That's capitalism folks, that's just how it works.
Big companies making big profits put the squeeze on employees because at the moment they are quite easy to retain - and even if some quit in protest it's dead easy to hire in new people, who will likely be cheaper. A certain amount of attrition is a good thing.
Here's a tip - when you go to those meetings where HR tells you how the people are the company's most valuable asset, blah blah, you can safely ignore all that guff. Big companies are much more like those robots in Terminator. They don't have feelings, they just do what they are programmed to do - and they don't stop, ever.
It doesn't really matter what you or they put into it. The problem is the return depends on the investment performance of the life company that is assigned to manage it. I recently got a statement for a scheme I went into in 1994 - the fund is now worth less than the total contributions, due to the investment skills (and fees) of a certain "Equitable" assurance company based in Scotland.
Defined Benefit schemes are immoral
A Defined Benefit scheme is an unbounded promise on future shareholders.
It says "no matter how long you live, we will pay you so much money each and every month".
This was bad enough when the average worker retired at 60 or 65 and died before they were 75, so it was a ten- to fifteen-year promise. Now as the average life expectancy for a white-collar white male slides up towards the low eighties, it's a promise to pay for twenty years or more.
Shaffted AGAIN !!!!!!!!!!!!!
Well what a surprise ? NOT!!!!!! Just another way to pull the moral down the pan. Oh how good it is to work for IBM UK Ltd ?????. There seems to be one point missing . This is to maximize the profits for the share holders . I don't seem to see any mention of the short fall I'm the M plan ??? Last year we lost over £1k so that's out our pockets as well .
This is a cost cutting exercise with a double edged sword. Lets see how many people we can force out the door without a severance package and the ones that stay costs us less ????
GOOD OLD BIG BLUE
It will save money...
So when is the Civil Service going to make the same decision?
I used to be a proud IBMer, those days have long gone
No pay rises despite excellent business results "because we have to prepare for tough times ahead". When tough times arrive "can't afford pay rises this year". Despite this the CEO got $21M last year - obscene!
A "high performance culture" so each year managers need to identify 10% of each team as poor performers, some of these are managed out. Next year it's the same again. At the end of 2008 the 10% became 15% without warning so some of those who thought they were OK were suddenly not OK. Following this insane process eventually leaves one person in each team!
Pension promises which are then broken. DB pension scheme becomes too expensive at a time when the business results are good. Does the new (Australian) UK CGM think we're dumb?
There hasn't yet been a comment by Larry Hirst (the ex-UK CGM and current European Chairman) - it would be interesting for the Register to make contact with him.
Because early retirement is likely to become more expensive with this change, many of the 28% of the workforce will probably choose to retire before March. That should stuff the odd development and service contract!
@Grabbing All They Can Get #
AC 01:29 wrote "Most companies are freezing or reducing wage increases". In which case they can think themselves lucky - some companies are not stopping at 0% increases but introducing noticable percentage cuts in salaries. Which really hurts a workforce that hasn't had the year-on-year (RPI) increases that luckier folks have had - adding insult to injury where those selfsame companies are making _increasing_ profits.
I feel for the IBMers - but I can't help thinking that the boards in other companies will look at IBM and go 'well if it's okay for IBM to screw over their workforce like this, then maybe we can go one better'. So you'll see a rush of other companies doing the same - albeit with less 'generous' replacement terms than those offered by IBM.
I agree with AC 01:29 - it's not about sustainability, it's all about bumping up the bottom line so those hell-sent executives can rake in the mega-bonuses that they're used to. Put 'em against a wall and shoot the lot of 'em says I. ;)
Retirement and pensions...whats the point?
I started overpaying my pension from the age of 24 in the hope I could retire early at 55 (i'm 38 now).
However, the more I look at things I reckon by the time I hit 55, retirement wont exist as an option for 90% of the workforce. You'll have to work till you drop as there will be no framework in place to support it whether govt or private sector. My pension planning might get me out at 70!
Someone will have to keep all those sodding smug 90 year old babyboomers in their 25th+ year of SAGA holiday retirement.
I still reckon there might come a day when the Govt gives in and lets the corporates just plunder the pension funds Maxwell style to keep them going.
Pulling the rug?
Another point - a lot of commenters are saying the rug is being pulled from under long-term employees, but actually it might not be as bad as that.
Correct me if I'm wrong (and I'm sure you will), but I thought under current pension laws you can't remove final salary benefits retrospectively, right?
So if you were on a 60ths scheme for example, and had served 30 years up till now, you'd still get 50% of your final salary when you retire - it's just that you switch to a defined contribution from now, i.e. the point where IBM made the change.
I'd like to know if that's true. Googling for it just made my head hurt with legalese.
The dawn of reality?
Companies cannot betray their employees?
Companies are altruistic?
Employees have loyalty to their companies?
Employees enjoy working in bonus schemes?
Politicians do not fiddle their expenses?
High level bankers earn their bonuses?
The NHS will always be affordable?
Poverty and hunger can be eliminated?
DB pensions will always exist?
Long term . . .
I loath nothing more than managers using short-term conditions, like recession, to justify the steady reduction of long-term rights & benefits, while executive compensation steadily rises (which means it rises as a proportion of company costs).
Could it be that they actually look for bad times to push through unpopular moves? Never. . ,
Here we go again
IBM made staff an offer a couple of years back who were still on the Defined Benefit (DF) basically they would sweeten the deal (much like they are now) if you moved to the Defined Contribution (DC). The persuader was that if you remained on the DB scheme only 50% of your future pay rises (laugh) or bonuses (more laughter) would contribute to the final calculation. Many people jumped to the DC because they could see the writing on the wall.
I am not completely anti to the move, but the DB scheme was part of the reason I signed up with IBM and stayed for so long. To have it removed now is frankly outrageous. If IBM told Palmisano we are going to cut your massive stock bonuses from next year because of the uncertainty of how much they are going to cost, what would happen? He would sue the company for breach of contract and probably leave. I guess if you have earned millions per year you can afford such actions. The rest of us have to consider paying for food, roof and clothing.
White man as its IBM stealing the money from my pocket!
It's a Cartel!
This article and the comments posted are so true for other companies in this industry. Take HP for another sad example. Maybe the numbers are slightly different here and there regarding the contribution changes, profits or the obscene amount the CEO takes home but at the end of the day this company is doing exactly the same kind of thing. Every single benefit or cost associated with employees is being cut back significantly and morale is rock bottom as a result.
In the UK they are asking for a 5% pay cut even though the company profits are enormous. They have raised the employee contribution for the final salary pension scheme from 3% to 9% and now 12% for the same level of benefit (in effect a 9% pay cut in itself) and the scheme has long been closed to new members. It will not be long before this is stopped completely as IBM has done.
And the excuse given for doing all this - "benchmarking the cost structure against the competition" It is a cartel and at at the CEO club they must be laughing together as they all agree on what to reduce next. Makes a change I suppose from wondering how to spend their personal millions.
I got an Innovation
IBM run a program called innovations. It was designed for the normal worker to come up with ideas on how to best do the job in hand and make cost savings to IBM. They had to put together a package and show how it would work. This was rewarded with local awards and a lavish dinner at the end. Guess what they took the ideas and canceled the dinner ( no funds ) hahaha.
Now I have an innovation of my own for them. Why not take the pension rights off a 1/4 of the work force , Stop bonuses and put another freeze on wages . This will demoralise them and make them look for a new job without having to pay a severence package That will save Millions to IBM .
OH SILLY ME THAT'S BEEN DONE ALREADY
PS: without workers doing the work there is no IBM. People in the top floor offices should remember that . You don't get the most from an unhappy work force ?
Thanks IBM. First you re-define the DB pension to turn it from one of the best to one of the worst (in terms of increases of pensions in payment), then you increase the contribution rates, then you reduce the accrual rates, then you scrap the thing all together and hike the penalties for early retirement (redefining today's norm as "enhanced") from 3% pa before 60 to an unknown figure (likely to be 6 - 7%) for each year before 63.
Anyone in the DB scheme who is old enough to take their pension next March / April will probably elect to do so, otherwise they will be stuck with being unable to afford to go much before 63. Clearly this was part of the deal - it's a way of offloading a lot of the more highly paid employees, without having to fund any separation packages. It will be interesting to see if the retirement option is an open door (in which case it will be bloody tough being an IBM Customer) or whether some people will not be accepted (in which case they are likely to be people who will readily find alternative employment and will no longer have their pension holding them back, so again it will be bloody tough being an IBM Customer).
Anyone in the DB scheme who will not be old enough to retire next Spring (like me), is faced with all their retirement plans being cast aside. The feeling of utter powerlessness is the most frustrating aspect. The one good thing is that I will no longer have any reason to stay with this dreadful company, so once the recession starts to receded and the job market picks up, I'll be putting a lot more effort into finding another job than I'll be putting into my current one.
This is one utterly amoral company which only operates on the basis of staying within the law (or at least making sure the execs can blame someone else when it crosses the line, even if their bullying management style caused the transgression in the first place), not on the basis of any moral compass. All the public statements about leading the world to a better place should be treated as the utter bollocks which they surely are. It is a company that adopts a single management style: bullying. HR push out shed loads of crap about work / life balance etc, but the reality is people are forced to work longer and longer hours under more and more difficult conditions to try and avoid being placed in the bottom 15% and managed out. It's really bad news being in a good team, you can easily over-achieve all your targets, make loads of money for IBM and still get poked up the rear end.
See if you can guess how motivated I feel?
The Replacement Killers... err... Workers
The point is not that there will be no one to work at <insert company name here>, the point is that they _need_ the existing workforce to cycle through. That they have held on as long as they have is downright terrifying to the management!
By getting rid of the existing people, they can get cheaper local (or foreign) labor that will not have the expectations of the older workforce. They won't complain about not getting something they were never offered.
Uncertain times are a godsend to corporations; especially if the "uncertainty" is one of their own making. Does no one remember what happened in the 60's? In the 50's, a house cost one year's salary at "standard wage". The same house now costs 10 times a year's salary at "minimum wage". We should not be surprised that they are still doing the same thing 60 years later, people.
"Correct me if I'm wrong (and I'm sure you will), but I thought under current pension laws you can't remove final salary benefits retrospectively, right?
So if you were on a 60ths scheme for example, and had served 30 years up till now, you'd still get 50% of your final salary when you retire - it's just that you switch to a defined contribution from now, i.e. the point where IBM made the change."
Correct. It should also be linked to RPI or CPI until then. Still not right though,
The bigger question! The elephant in the room ...
I totally agree with WhatWasThat?'s comment - the management of Western World plc want rid of all their "expensive" Western staff and would prefer to replace them with cheaper offshore staff.
Of course if every company does that then there will be no one left with any money to buy their products. This all started back in the seventies and eighties when low-end Manufacturing started to go east. Mining's buggered. The utilities have been sold to the french and germans. Now the high end engineering is going under with the recession, and the white collar skilled work is going offshore. So what jobs are we all going to do when our lords and masters have shipped everything overseas ? What are our kids are going to do? The bosses are all okay - they've been taking home million dollar bonuses for years. What about the rest of us ? Any ideas what a forty something code monkey with a physical sciences degree should retrain as ?
Accrued benefits can't be taken away
"Correct me if I'm wrong (and I'm sure you will), but I thought under current pension laws you can't remove final salary benefits retrospectively, right? So if you were on a 60ths scheme for example, and had served 30 years up till now, you'd still get 50% of your final salary when you retire - it's just that you switch to a defined contribution from now, i.e. the point where IBM made the change."
Yes, accrued benefits can't be taken away. In the example you give, the eventual pension would be calculated as 50% of current salary, upgraded in line with price inflation (possibly capped if inflation is particularly high, I think). So if your salary grows faster than prices from now until you retire, your pension from the scheme will be less than 50% of your salary immediately before retirement.
I'm not clear if IBM will be "winding up" the DB pension scheme. If it were to do so, it would probably need to inject a reasonable amount of money into the scheme, so that an insurance company was prepared to take over the liabilities (i.e. pay current and future pensioners). A wind-up (no pun intended) is perhaps preferable, from a scheme member perspective, to potentially having to rely on the Pension Protection Fund (which caps benefits), should IBM become insolvent in the future.
Retention of earned pension
The issue is not that IBM is removing the benefits accrued so far, it's that they are 1) stopping any new benefits from being accrued (this is disappointing and not unexpected, given the opportunistic nature of execs feathering their nests) and 2) changing the rules about how the accrued benefit can be tapped - practice to date has been to levy a 3% pa reduction in pension for every year before 60. This meant that at 55 the reduction was just 15%. IBM has announced that it plans to end this "enhancement" (typical IBM inability to be honest, this is "standard" practice), but has not given too many details. Currently a deferred pension (e.g. if someone leaves to work for another company) attracts a reduction around 7% pa and the belief is that the new arrangements for the closed DB scheme will be similar - 6 - 7% pa for each year before 63 (IBM's "normal" retirement age). On this basis, someone retiring at 55 will replace the 15% penalty with a 48 to 56% penalty.
As well as the recently announced plans, IBM has been progressively diminishing the value of its pensions. For example, any pension earned before 1997 is not subject to any statutory indexation floors (which IBM has adopted as caps). Over the years IBM has become less and less generous with the indexation for pensions in payment of the pre '97 "discretionary" element, eventually settling on a practice of 70% of RPI. More recently this has changed to a committed payment of 60% of RPI, reducing to 50% of RPI with RPI capped at 2.5% - clearly a great deal less useful (especially if inflation is greater than 2.5%) than the discretionary approach it replaced. However, this committed indexation is only committed until 2020, after which I expect IBM will cease to offer any increases.
So, rather than the rather excellent pension scheme which I joined, I now have something which will pay out a great deal less at a much later date and any significant inflation once in payment will rapidly erode the value. In effect IBM has shifted the burden of funding me in old age, assuming I survive more than a few years after retirement, to the state. This is the same state that has enacted post-Maxwell pension reforms and a tax-grab which have encouraged companies to abandon DB pensions and done nothing to stop them. The same state that allowed the banks to muck up the economy and which is now so in debt (in our name) that the economic future does not look all all good. The prospects of making up the pension gap through investments or pay rises look very remote indeed.
Find about more about pensions
"I'd like to know if that's true. Googling for it just made my head hurt with legalese."
I'd recommend the Pensions Advisory Service (TPAS, formerly OPAS) website, for those who want a better understanding of pensions.
Morale in IBM UK has been dreadful for the last few years and this action is going to damage it further for years to come. Who is going to "go the extra mile for the customer" in an organisation where the Execs can reward its long term staff like this?
IBM Pension Change legal position
Interestingly over the lat 4 years IBM has increased base hours for most of its employees from 37 to 40 hours week. Most of the employees affected by this pensions cut proposal have been forced to work the additional hours without additional pay, or change to employment contracts.
Apparently, the pensions change proposal is just another change without any real employee agreement.Maybe there is a negotiation point on severance pay here, for back hours pay, for outgoing IBMers. Acknowledged that a lot of IBM's used to work condiderably more than 40 hours a week, before this latest anouncement.
Anyone know the legal position on making changes to employment conditions without agreement of employees.
Apparently these people being affected are core to IBMs delivery capability.
What does this mean to existing contracts and delivery capability.
I understand that IBM used to be a great place with Integrity for staff and clients.
Are we seeing the Very Public end of that integrity?
Can you believe the Big Blue hype about Green and Smarter Planet?
Every where in the news to day is about corporate and government greed and lack of integrity. No wonder our society is becomming self centered and greedy, when this is the leadership model.
Lots of moral, legal and where is the world going to stuff here.
Reality is Scary
IBM executives are of course on totally different remuneration and pension schemes. IBM UK cannot afford to fund redundancies, this scheme can therefore be seen to offer at this time of Pensions being in the News etc an opportunity of both enabling to reduce staff levels of the generally higher paid (longer serving employees) without redundancy payments and change in Pension terms. As there is a Pension carrot and big stick as you will loose out on Pension by staying (depending on how old you are). By moving in April 2010 to new scheme No early retirement at 60 but now 63 and if you do then decide to take early retirement instead of losing 3% per yer before early retirement (60) it will be 6 or 7%. So why stay and moved to new terms!?
Want to learn more then go to the Associate of Members of IBM UK Pensions Plans web site (AMIPP) for all the News There is over a 1000 comments.
SHAFTED BELOW GOT IT RIGHT Why the Unite Union is being inundated with new IBM members
SHAFTED BELOW GOT IT RIGHT Why the Unite Union is being inundated with new IBM members!! It is not just the closure but the negative and Real Change in T&Cs, IBM basically gets a no cost form redundancies of the longer serving, higher paid employees. Read SHAFTED below. Remember if IBM get away with it then your next! so be warned....
You're all missing the point here - this is about workforce reduction
I think the contributors below have missed the real sting in the IBM announcement, which is the change to the early retirement provisions.
It's been pretty obvious for several years that defined benefits schemes are on the way out, so it comes as little surprise that IBM is shutting it's scheme. The terms are not bad - employees keep the accrued benefits and in future contibute to a money purchase scheme with significant company support.
However, the big change is in early retirement provisions for those with accrued defined benefit pensions. This really matters as IT is a business where few people work right up to retirement age. Things change so fast that almost everyone ends up taking early retirement.. Over many years the deal has been that when a change comes along that means you have to retrain (again), there has been an alternative for the over 50s to take reasonably generous early retirement terms, usually supplemented by a voluntary redundancy package.
IBM's voluntary redundancy packages have got steadily fewer and steadily meaner meaner over the years, and have now disappeared completely. So the carrot is being replaced replaced by the stick and IBM will now effectively fine people over 50 who want to stay on in the comany beyond next April, by reducing their pensions.
Under the current early retirment terms, employees loose 3% of their pension for each year by which they retire early. Under the proposed changes this will become 7%, so someone planing to retire 5 years early will loose 35% of their pension rather than 15% - a huge difference. For someone planning to retire 10 years early it almost wipes out their pension. But those eligeable to retire early (i.e. over 50) can keep the current early retirement provisions by retiring before April next year.
So for anyone now in their early 50s this is is a no-brainer. Expect a huge exodus from the company of those in their 50s in March next year.
What a clever and Machiavellien way of achieving a redundancy program - making a high proportion of those over 50 leave the company without paying any redundancy money and without contravening age descrimination legislation!
One downside is a huge loss of trust between IBM management and its employess, which should matter for a company that makes "Trust and personal responsibility in all relationships" one of it's core values. But maybe that was just bullshit too.
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