back to article MPs slam IBM pension moves

A Westminster Hall debate has led to serious criticism of the way IBM ended its final salary pension scheme. Sandra Gidley, Lib Dem MP for Romsey, said she had heard from many IBMers, especially those in their 50s who were hit hardest. She explained that in 2003 IBM staff were asked to increase pension contributions by 50 per …


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  1. Anonymous Coward
    Thumb Down


    "Christopher Huhne, MP for Eastleigh, noted that IBM made record profits in 2008 and there was no underlying reason for it to treat its staff in such a way."

    Yes there is 'shareholders' that is what the company is supposed to do, make as much money for shareholders as possible without breaking the law. If you have to mistreat your staff along the way then so be it, it's the American way of business unfortunately it's spreading.

    IMO shareholders should get what's left when everyone that made the money is sorted out, as it stands they get first look for just buying a few bits of paper and sitting back how is that fair?

    1. Anonymous Coward

      You're right, but you need to see the whole picture

      And the whole picture is as follows: shareholders and top executives make whatever laws does not forbid them to do to keep the highest profit level. They collect their revenues and their bonuses. Yes, they may have destroyed the long term prospects of the company, but that is not their job. Their job is to get the highest possible profits for as long as they benefit from that.

      Once they do that, both shareholders (moving their money elsehwere) and top execs (shifting jobs) proceed to start again at another company.

      The hundreds or thousands of people left without jobs are not their concern. The intellectual assets lost in the process are not their concern. This is the essence of the stock market, and to a lesser extent, capitalism.

      This what is largely happening in the western world, where maximum short term profitability (in other words: greed) is what drives executives and investors. Companies see customers running away to better offerings from emerging countries. Which will, in the long term, end up like their first world counterpars and destroy themselves.

    2. Anonymous Coward
      Thumb Up

      Problem is...

      ...that companies such as Banks who put their employees first and then pay the shareholders the remainder of the profits too get absolutely slated for doing so.

    3. Onionman

      @ First reponse

      "IMO shareholders should get what's left when everyone that made the money is sorted out, as it stands they get first look for just buying a few bits of paper and sitting back how is that fair?"

      That's right, shareholders just "buy a few bits of paper". No mention of the fact that they fund companies in the first place and they fund growth in companies. They are RISKING their cash. And they have the last call on the companies' funds after all other creditors have been paid. Hardly the picture you're painting.

      And rememebr, the major shareholders here represent you. If you have money in a pension, you own shares/"just buy a few bits of paper" so you benefit too.

      What needs to be sorted out is the pension funds, who push for short-term returns on their shares despite the fact that they should be in for the long term.


      1. Anonymous Coward

        No, what needs to be sorted out is...

        that pension funds should not rely on what is basically a casino by another name: the stock market. Betting the future of people on something that is basically as random as a monkey throwing darts seems to me not a reasonable way of ensuring a retirement.

        1. Onionman

          @Ac 13:10

          "No, what needs to be sorted out is...that pension funds should not rely on what is basically a casino by another name: the stock market. Betting the future of people on something that is basically as random as a monkey throwing darts seems to me not a reasonable way of ensuring a retirement."

          Utterly ludicrous. What should they do, keep your money under the mattress? Long term (which pensions are) there is no better way to grow a pot of cash (reference a million studies). Yes, it's risky in the short term, but pension funds shouldn't be looking short term.


          1. Anonymous Coward

            Utterly ridiculous?

            In case you've not notice it yet, no, it is not ridiculous. Because the pension funds are allocating the money based on the three year company plans, not on the 25 year span that those million studies you mention analyze.

            Remember, the pensions fund managers are getting their bonus based on annual performance, thus they operate based on the same short term that the rest of investors and the board of directors.

        2. Anonymous Coward

          the +ve on pensions

          the problem is that the 20% of IBMers in the final salary plan have caused the 80% to miss out on salary rises for the last 5 years because of the stupid accounting rules around pension plans.

          In a 25 year investment, the company is required to ensure that in any financial year the plan tracks towards the target level. This means that the 12month downturns (or crashes) require the company to make good on the funding level within that financial year. This has lead the company to redirect funding to support the final salary scheme to the detriment of the people on the defined contribution scheme.

          Also note that the number of people affected by this is roughly 10% of the employees. Therefore 90% of the people benefit from the announce INCREASE in the company level of funding to the defined contribution system.

  2. Anonymous Coward


    "Christopher Huhne, MP for Eastleigh, noted that IBM made record profits in 2008 and there was no underlying reason for it to treat its staff in such a way."

    That sums up my experience when I worked for them.

    I've never encountered a company that appears to hate it's workforce so much.

    1. Anonymous Coward
      Thumb Down

      Typical .... of the modern wourld.

      When I worked for IBM in the early '90's, it was a different company. There was respect for the employee, salaries were more than competitive, and the pension was about as generous as any non-banking organization. And anybody in a customer facing environment would probably get a car allowance or company car. Standby allowances were second to none in the industry, making it really worthwhile to be on call.

      Even when people were made redundant (there was a recession in the early 90's if you remember), the pay-off was pretty generous, amounting to a larger that one multiplier of a months salary per completed year of service, together with a pension advancement to those people who were withing striking distance of the IBM retirement age (then 50).

      IBM did not need to be unionized, as their in-house personnel policies were such as few people actually felt the need to talk to a union. Open door policies all the way up the management chain meant that you could find someone who would at least listen to any grievance. Employees felt supported, and it showed in their confidence and loyalty.

      Since IBM moved into services, it appears that there has been a sea-change to the way they treat their employees. Jobs are being down-graded, senior techies are being disillusioned as a result of unachievable targets amounting to something close to constructive dismissal, and now all of the pension schemes are being down-graded, especially for those with the longest service records. Those more recently employed were only ever able to join a defined benefits scheme.

      In addition, travel and working from home allowances are being cut, and the training budgets are being squeezed. Many technical jobs (almost all of the Support Centers) have gone abroad, pay reviews are more than 15 months apart, and never back-dated, and performance related pay rises (effectively the only pay rises available) are almost impossible to achieve. I know IBMers who have effectively had no, or less-than-inflation pay rises for 4-5 years. And woe betide you if you do not get at least an adequate in your performance review, as you're job is then in jeopardy.

      So is it any wonder that the employees are now talking to Unions and their MP's? I am sure that my recollection is not just through rose-tinted glasses, as I never really achieved true-Blue status, always reserving my position as a bit of an outsider, but I am sorry to see it go this way.

      1. Ed Gould

        IBM's past

        In the late 80's and early 90's IBM did an about face on a lot of things. Employee compensation, employee relations and retired employee benefits.

        Needless to say that a lot of IBM employees are now unhappy *AND* it is showing to the customers.

        We used to have a real IBM salesman assigned to our account and he knew the business probably just as well as the VP's. Not any longer you want to buy a multimillion dollar CPU HAH! you get to call 1-800 number and talk to a nameless person at the other end that doesn't know squat about your business.

        We used to have Sales Engineers that worked full time at the company and they were out there making sure everyone knew about IBMs' offerings from software to hardware.

        We used to have on site software support now its call 1-800 for software support. Granted IBM improved a lot on their debugging process before it happened. But now if we get into a situation where the entire system is down and we need help it takes a bloody miracle for IBM to show up let alone get the necessary people on site to fix the issue.

        Then IBM in its infinite wisdom cut back on education discounts so MS (and others) slid nicely in and now try and find a IBM trained college person. WHile I will not say its impossible it is close.

        Yes IBM has made some noises in the education system in the last few years but now the damage is done as no one want to learn IBM as its old and senile. Kids want shiny toys to play with and that is what happened.

        IBM employees are now looking out for their own interest rather than IBM's and the customers.

  3. Anonymous Coward

    IBM sucks

    And always will; I'm so glad that when I was considering my career I chose to stay away from them!

  4. Anonymous Coward

    Govenrment is to blame for Final Salary pension demise

    "even though the company, along with many others, had taken a pensions holiday for several years"

    This is due to government legislation - the current government passed it. They thought that companies might try and reduce corporation tax by over-funding pensions when they had profitable years. That's called "Saving" for a rainy day - however, this government has forgotten the concept. Add to that the scandal of the dividend tax legislation it meant that, eventually, final salary pensions would only be for the priviledged (i.e. Civil Servants and those indirectly employed by government - e.g. BBC, QUANGOs).

    MPs don't have the right to critise IBM, they need to get their own house in order.

  5. Anonymous Coward


    And this achieves what exactly? The changes are happening/happened. People will finally realise that a hulking global organisation cares more about profit than peeing off its employees? Thats not news.

    I'm assuming that these Westminster debates are not paid for by taxpayers who actually expect their MPs to do productive work, as opposed to spending all day on their heavily expensed gravy trains discussing how appalling it is that bears don't use the perfectly adequate public lavatories in publicly accessible woodland, and instead defecate near picnic areas which causes a potential health hazard. Won't somebody think of the children!?

  6. Anonymous Coward

    lots of communist/socialist comments!

    I thought the western world believed in the free market!! Now it turns out that the free market doesn't really benefit everyone.....

    mmm well you what the free-market thinkers will tell you: the shareholders and top executives have reached the top and make a lot of money because they are the best in what they do, they are hardworking geniuses and they deserve everything they get... and don't forget that they are rewarded because their work generates wealth for society as a whole.

    To be honest I'd rather call myself communist than think that all this crap is true.

  7. Anonymous Coward
    Thumb Up

    Final salary should be scrapped anyway

    Because it's not feasible to fund it reasonably by the actual employee contributions it ends up that current employees (i.e. ME) fund the lavish retirement of the final salary generation through our work whilst being denied the same sort of benefit ourselves.

    The sooner the public sector gets kicked off the final salary scheme the better, too.

    BTW, IMHO working for big blue is pretty great. The money's not bad, the benefits are good and they seem to have a raft of procedures in place specifically designed to prevent you from having to do any work...

    1. Anonymous Coward

      Except in IBM "THEY" fund "YOU"

      Back in the 2004 time period IBM took a whole whack of cash out of the C-Plan (which was massively in surplus) to fund the M-Plan. They said at the time that with the C-Plan they take the risk in the bad times, so should be able to do what they liked with the fund in the good times. The C-Planners money was taken to fund my (and your) pension.

      Well guess what, the bad times are here, at what did they do? Shifted the problem onto their employees.

      If you actually watch the debate the biggest complaint is not the closure of the C-Plan, but the changes to the Early Retirement Discount Factor (ERDF). It looks like the main reason for doing this was to get headcount down without paying out redundancy, effectively saying "go now or else". This is the really scummy move that is causing most upset.

      1. Anonymous Coward

        As someone never offered a final salary pension

        And in a generation that widely holds that neither your job nor your government will adequately provide for your retirement, I'm sorry if I seem to be lacking in sympathy. It is a bad thing.

        The sooner this issue gets brought to a head the better, at the moment we're just storing up the problem for the future.

        It *is* a scummy move, but you have to wonder why they would be doing it in such a way as to force the oldest and most experienced people on and out. Personally I see a lot of stagnation in big blue and maybe this is their way to try and shake that out. I would imagine they found a way to keep anyone really indispensable.

        1. Anonymous Coward
          Anonymous Coward

          However, everyone is dispensable.

          "Personally I see a lot of stagnation in big blue and maybe this is their way to try and shake that out. I would imagine they found a way to keep anyone really indispensable."

          In terms of showing how this has been thought through it is interesting to compare Hurlsey labs with the rest of the UK. In the UK (which has/had) a headcount problem, nearly all those eligible will be gone by the end of 1Q. In Hurlsey (which doesn't have a headcount problem, but does have people with rare skills that need to be transferred - especially on System z) people will be trickling out the door up to the end of 2011.

          I believe (but I've no proof) that the extension to 2011 (which was a "concession" during the consultation) had to be put in place as they would have had a whole load of System z skills stampeding out the door in 1Q this year. The extension was put in place to "manage" the hand-over of skills that were indispensable.

  8. Anonymous Coward
    Anonymous Coward


    When will politicians wake up and realise those of us in the private sector are being totally fucked over by big business. They just see the public sector workers who seem to be on 1970 style packages.

  9. Anonymous Coward
    Paris Hilton

    The irony

    @AC There could be a considerable amount of irony the statement of the first commentator who so derides "sharesholders".... If this person has a private or company pension, then that persons fund manager is one of the evil shareholders being berated!?

    Invariably there are many rich individuals, but one of the largest groups of "Shareholders" are pension funds!!?

    additioanly, as others have pointed out - sadly they own the company not a lot you can do about it? The original AC would be very miffed no doubt if he bought a house only to be told he could only live it in every 2nd Tuesday as the employees of the bank or mortgage company had need of it on the other days !?

    Paris, as i am sure she often feels she is being shafted......

  10. The First Dave Silver badge
    Dead Vulture


    So, what was it about this that was "redundancy by stealth"?

  11. Ian Michael Gumby Silver badge

    You just don't get it...

    IBM is no longer run by technologists but by bean counters. (Ok, its been this way for a long time.)

    The point is that the bean counters see you as your IBM Serial number and not as a person. You're not a skilled worker, but someone who can always be replaced by cheaper labor and if it make sense, they will do so.

    Only when the output from the company effects their bottom line will they do something. Again, I mean that if/when the quality of service effects their overall customer satisfaction, will they do something.

    At one eBU (yes I did escape the borg...) one IBMer said that things were better in the 90's and that when things get better, IBM will treat their employees better. This was ~2003. 7 years later? I guess things aren't better at IBM. (Just don't tell the bean counters who are congratulating themselves on record profits.)

    Oh there are so many stories I could tell about the internals of IBM...


    1. TeeCee Gold badge
      Thumb Up

      Re: Sub-head.

      I wondered that too. The implication there is that the purpose of screwing around with the pensions is to make the existing package less attractive, encouraging staff to leave. The correct term for this would be "Constructive dismissal" and, if this were so, IBM would be in deep shit.

  12. Anonymous Coward

    National I.T Strike

    What we need is for the union members in I.T companies like IBM, Fujitsu, HP, to all go strike at the same time and say FK the lot of your. See how long it takes before the Government craps it's pants, when the countries I.T goes down the pan and demands a solution.

    Although I hate to say it, the French unions have the best ideas and normally get what they want.

  13. The Jase


    "They are RISKING their cash"

    Not anymore it seems. When anything big goes down the shareholders throw a hissyfit and insist the government bail them out.

  14. Dazed and Confused

    Gordon was warned

    Apparently Gordon was warned by people at the treasury that his raid on the pension plans would probably cause a lot of them to close but he never expected to be there long enough to carry the can. The tax was sold as a fat cat tax and the press were so in love with Tony's Cronies at the time they didn't raise a bally hoo about it.

    As to IBM and everyone else.

    There was a time when companies respected their staff as being their greatest assets, after all it is your staff that earn you the money. It was widely felt that a happy team of employees who felt the company would care for them, would care for the company and work hard.

    This view of management has gone out of fashion. As as staff morale and productivity.

  15. Anonymous Coward

    When is Redundancy not Redundancy?

    When it's enforced retirement, that's when.

    IBM has manipulated its pension scheme to force people to leave the company.

    IBM has also manipulated its PBC (appraisal) system, so that managers are forced to give 1 in 5 IBMers failed grades each year (PBC 3s). People are then managed out of the company via disciplinary action.

    Why is IBM doing this? Because it wants to shed "expensive" UK workers and migrate jobs to low cost countries.

    IBM doesn't care about service. IBM doesn't care about its workforce. IBM is just as greedy and immoral as any of the banks. In some ways IBM is worse than the banks. The banks made genuine mistakes and didn't foresee the effects of their actions; IBM has concocted deliberate policies to make its workforce redundant, without paying compensation.

    All the "Smart Planet" nonsense is just hot air. IBM needs to get its own house in order before it starts preaching to the rest of the world. Ther world is a smarter planet without the likes of IBM.

    IBM has sunk to a new low. Shame on them!

  16. F MacIllFhinnein

    Just like the BBC...

    ..whose management took a pension holiday (i.e. stopped employers' contributions) during the stock market's good times despite the protests of the unions. Now, there are worries about whether the BBC Pension Fund can pay out, and the final-salary scheme (the more recent, miserly one - not the good one that was stopped many years ago) has been closed to new entrants. Of course, the 375 BBC managers earning over £100,000 a year see that as only a concern for others - you know, the little people that make informative or entertaining programmes, report on lies about Iraq, support programme-making, etc.

  17. This post has been deleted by its author

  18. Anonymous Coward

    Warning to potential IBM graduate hires and other employees

    Potential new graduate hires and other potential new employees should take heed of IBM HR policies. Remember, 1 in 5 get managed out each year; even if you are in a high performing group, when ranked, one of you will be bottom of the ladder and will be managed out via the PBC process. Do you want the stress of this process, or would you rather work for a quality company?

    If you are managed out, how easy do you think it will be to find another job when you have been fired for poor performance by IBM?

  19. Anonymous Coward
    Thumb Down


    "IMO shareholders should get what's left when everyone that made the money is sorted out, as it stands they get first look for just buying a few bits of paper and sitting back how is that fair?"

    Shareholders are giving away part of their property so that a company can buy expensive machinery, fund R&D, build factories, fund inventory, supplies and fund employees until they contribute to profitability. That is called capitalism.

    Surely the shareholders want some money back on their investments, as much as you want money back after having your money in a bank account for a year.

    Yes, would it not be great if we could all live in that happy world of socialism, where everybody is paid the same worthless money so they can buy some horrible cars (Tabant anyone ?) and 10inch TV sets ? That surely is an excellent Utopia !

    Did I forget to write about those russian hospitals w/o hot water or the horrible toxication of the environment in the eastern bloc ? Maybe I should also add those who died because no kidney machines were available at all in the east ?

    1. Anonymous Coward

      Three things matter

      Three things count in any business.

      1. Your customers.

      2. Your shareholders (if you're a public company).

      3. Your employees.

      This is a 3-legged stool, and you neglect any one of them at your peril.

      Thomas J Watson Jr once said of IBM "No subject occupies more executive time at IBM than the well-being of our employees and their families."

      IBM today does not care about its employees, and increasingly, its employees don't care about IBM. Were I an IBM shareholder, owning a share of business in this state would worry me.

  20. Nick 6


    Tabant? Toxication? Guess you are still working on that MBA - but make sure you use the spell check before submitting it.

    Its the run away extremist Capitalism which will destroy our economy in the end. The problem is not with shareholders (or even well-paid execs) - IBM had those throughout history and they got their dividends, stock price growth, etc. But at the same time they paid the high quality employees who were creating that worth and gave them respect.

    Unfortunately the deluded greedy pigs of Wall Street and their various corporate whores in the C--suites around the world seem to think that they are the ones 'making it happen'. They aren't. And by forcing down the financial and personal worth given to employees, they're killing morale and productivity.

    The 'everything for me - nothing for you' approach ends up bankrupting society and concentrating wealth in so few people that it can't benefit many people - the trickle is too slow to reach many people.

  21. Ascylto
    Big Brother

    Just wait ...

    until you see what they'll do with UK Identity Cards information.

    Selling their grandmothers was something IBM did a long time ago.

    1. topdog


      got made redundant from IBM some 3 years ago. I had to train the german ibmers who were taking my job before i departed..insensitive?

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