Friday, January 06, 2006

IBM Changes U.S. Pension Plans Effective in 2008

IBM has announced that it has changed its U.S. defined benefit pension plans and that it plans to redesign its 401(k) savings plan, effective in January 2008. Specifically, as part of IBM's global strategy of shifting the future focus of retirement benefits toward the more predictable cost structure of a 401(k), IBM plans include:
  • stopping the accrual of future benefits in the company's defined benefit pension plans, and fully preserving all retirement benefits that employees will have earned as of December 31, 2007;
  • redesigning its 401(k) savings plan by giving current pension plan participants an annual company-funded contribution of as much as 10 percent of their pay;
  • assisting nonexempt pension equity plan participants to save more by providing an annual special savings award of 5 percent of pay to their 401(k) savings plan;and
  • ensuring 100 percent employee participation in the 401(k) savings plan by opening accounts for employees who do not contribute to the plan, and annually depositing the automatic company contribution of 1 to 4 percent of their pay directly into these employees' accounts.
Source: News Release IBM (January 5, 2006)

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