|January 15, 2006
IBM assaults employees' Retirement Security
|On January 5, 2006, computer giant IBM Corp. made a New Year’s announcement that it will be freezing the pensions of their U.S.
workers and shifting them into 401(k) plans in an effort to save $3 billion dollars by 2010. This announcement was made before
notifying employees. "This is a further takeaway of the employees' retirement security and part of a national trend to drive workers'
standard of living down while enhancing corporate profits and executive bank accounts," stated Lee Conrad, National Coordinator of
the Alliance@IBM, Communications Workers of America Local 1701, the IBM union organizing campaign.
Tagged from section 401(k) of the United States Internal Revenue Code, a 401k plan is an employer sponsored retirement plan
generally grouped into two categories: defined benefit (DB) and defined contribution (DC).
In the U.S., workers are increasingly being required to bear the costs and risks for their retirement and health care security. However,
curiously, the retirement packages of most top executives remain untouched. Moreover, as defined benefit pensions go by the
wayside for American workers, the George W. Bush White House wants to eliminate retirement security by incorporating radical
changes to U.S. Social Security from a guaranteed social insurance program to a risky Wall Street-based scheme.
CWA President Larry Cohen said in a press release, that U.S. workers are not only being forced to pay the costs for bad business
decisions that have pushed companies into bankruptcy, such as United Airlines and Delphi, but also the misdeeds of corporate
lawbreakers whose actions have wiped out 401(k) retirement savings at companies like Enron, WorldCom, and others.
The move by IBM is the latest in a string of pension freezes by U.S. corporations, which include Motorola, Hewlett-Packard and
Verizon. IBM's pension freeze will take effect in January 2008. Current retirees will see no change to their pensions.
James A. Klein, president of the American Benefits Council, said IBM's decision reflects an ongoing trend away from pensions and
toward 401(k)s. Traditional pensions, also known as defined-benefit plans because employees are guaranteed a certain amount on
retirement, are on the wane. There were 58,000 defined-benefit plans in 1994 and only 29,000 in 2004, Klein said.
IBM’s head of Human Resources, Randy MacDonald, said that the move is “all about cost-competitiveness so that we could continue
to be the financially viable company that we are. It’s about adapting our retirement plans to changing realities."
IBM reported in their 2005 third-quarter financial results total revenues of $21.5 billion, and operating profits of $1.5 billion.
The following link is a statement by CWA President Larry Cohen on IBM's plan to freeze employee pensions
Source: CWA / cawcouncil4000.com