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- New York Times: I.B.M.
to Freeze Pension Plans to Trim Costs. By Mary
Williams Walsh. Excerpts: I.B.M., which has long operated one of the
nation's largest corporate pension funds, said yesterday that it would
freeze pension benefits for its American employees starting in 2008
and offer them only a 401(k) retirement plan in the future. The company
said that the shift, which is expected to spur still more major companies
to move away from traditional defined-benefit pension plans, would
save it as much as $3 billion through the next few years and provide
it with a "more predictable cost structure." [...]
But the move by I.B.M., a financially healthy
company, shows that even some of the most secure businesses in the
country no longer want to bear the risk or the expense of providing
a firm promise of a lifetime pension. While I.B.M. expects to reduce
its labor costs substantially, its action bears little resemblance
to the recent efforts to cut or freeze pensions at troubled companies
in the steel, airline and auto industries. Those companies say they
are unable to generate enough cash to have any reasonable hope of
making good on their pension promises. I.B.M. has pumped about $6 billion
into its pension fund in the last four years and says that its plan is
fully funded. [...]
I.B.M. provides the nation's third- largest corporate
pension plan, with about $48 billion in assets. It said it planned
to make similar changes across its international operations, but
did not indicate how many people would be involved. The company said
it held about $79 billion in its worldwide pension funds. It had
already taken the smaller step of closing its pension plan to new
employees at the end of 2004. Those employees were instead offered
401(k) plans similar to the one I.B.M. now intends to give to all employees
as of 2008.
I.B.M.'s treasurer, Jesse J. Greene Jr., said
the company's current financial climate had been an important factor in
its decision to freeze pensions. Unexpectedly low long-term interest rates
made the American plan cost about $100 million more in 2005 than I.B.M.
projected at the end of 2004, he said, and about $300 million more in
other countries where it operates. Federal Reserve increases in benchmark
short-term interest rates in 2005 caused $200 million more in unexpected
The cash-balance design that I.B.M. adopted is
more vulnerable than traditional designs to rises in short-term rates,
even though it was promoted by actuaries in the 1990's as cost-effective.
Lawsuits at companies like I.B.M. with cash-balance plans were motivated
in part by the anger employees felt at seeing the companies increase profits
and executive bonuses at the expense of their own retirement benefits.
Mr. Greene said that demographic changes affected
costs as well. "These plans were never designed," he said, to
cover obligations that "run as long as people are now living."
- Wall Street Journal: IBM
to Freeze Pension Program in '08. Shift Includes
Enhancing 401(k) Benefits in the U.S., Saves Billions Through 2010
By Charles Forelle, Theo Francis and Ellen E. Schultz. Excerpts: Beginning
in 2008, IBM will stop contributing to its traditional U.S. pension
plan and a later retirement plan now held by 117,000 IBM employees.
Instead, IBM says it intends to increase the amount it contributes
to its workers' 401(k) plans. The changes will save it $2.5 billion
to $3 billion between 2006 and 2010, the company said. About 125,000
retirees, and former employees, won't be affected, the company said.
"This is the prudent, responsible thing to
do going forward," says J. Randall
, IBM's head of human
resources. "This is clearly about preserving the financial stability
IBM has complained that it expects pension costs
to increase in the future, but the move isn't a sign that the pension
plan is unhealthy. Its $48 billion U.S. pension plan has a small surplus,
about $200 million at the end of 2004, and its liabilities aren't likely
to grow significantly, because a year ago it closed the pension plan to
Rather, the financial allure of freezing a healthy
pension is that even though the changes won't take effect until after
Dec, 31, 2007, under accounting rules the company can record a reduction
in its pension liabilities, which will generate a boost to income in future
years. IBM declined to say how much the moves would reduce its pension
liability. The company did say that the actions, combined with other changes
it is making or contemplating in plans around the world, would reduce
its retirement-related expenses by $450 to $500 million in 2006, and by
$2.5 billion to $3 billion in the period between 2006 and 2010.
- Washington Post: IBM
Halts Pensions in Favor of 401(k)s. By Albert
B. Crenshaw. Excerpts: International Business Machines Corp. said today
it will freeze the pension plans of some 120,000 employees in the United
States, effective at the end of next year, and will offer instead a
more generous 401(k) plan. [...]
The freeze means that benefits earned by current
workers up to Jan. 1, 2008 will be preserved, but after that date they
will not increase. The company already had eliminated traditional pensions
for new hires starting last year.
The company said it expects the changes announced
today, along with changes it expects to make this year for workers
in other countries, to cut worldwide retirement-related expenses
by $450 million to $500 million this year and by $2.5 billion to
$3 billion through 2010. [...]
IBM over the past 15 years has revamped its pension
offerings several times, most recently converting a number of workers
to a hybrid "cash-balance" plan, which is operated by the company
but delivers benefits in a form that resembles a 401(k). Unhappy
workers sued the company over the cash-balance conversion, charging
that such plans violate federal age-discrimination laws. A federal
judge in Illinois agreed with the workers. That decision is now on
appeal. MacDonald said that suit was not a factor in IBM's decision
to freeze its pensions. [...]
The change means that about 80,000 IBM employees
under the cash-balance plan, as well as 30,000 who were grandfathered
into an older plan, will earn no new benefits under those plans, regardless
of how much longer they remain with the company. Typically, benefits under
pension plans increase as the number of years worked accumulates and as
- Yahoo! News: IBM
to Freeze $48B Pension Plan in 2008. Excerpts: Furthering
corporate America's move away from pensions, International Business
Machines Corp. said Thursday it will freeze its $48 billion pension
plan in 2008 and instead enhance its 401(k) benefits for its 125,000
U.S. workers. Nearly all IBM's U.S. employees — everyone hired
before Jan. 1, 2005 — have pension benefits accruing under a traditional
annuity-like plan or a cash-balance plan, which gives workers interest-bearing
funds that they can take with them if they leave the company. [...]
Beginning in 2008, then, IBM workers' pension
benefits will be locked in place, based on salary and length of service.
The accrual of benefits will stop, meaning future raises or additional
years with the company will not signify bigger pension checks upon
retirement. Instead, IBM will increase its contribution to its 401(k)
plans, in which workers get a defined, predictable amount from the
company that they're responsible for investing. IBM will double the
percentage of employees' contributions that it matches, to 6 percent
of salary; certain employees will be eligible to receive more. [...]
IBM executives said that by no longer having to
account for pension accruals that would have mounted after 2008,
the Armonk, N.Y.-based technology giant will save between $450 million
and $500 million this year alone and up to $3 billion from 2006 through
Pensions have been a touchy subject for IBM, which
was hit with a federal lawsuit — settled for up to $1.4 billion — filed
by employees who contended that IBM committed age discrimination when
it shifted to a cash-balance plan. Randy
, IBM's head of human
resources, said the decision was unrelated to the lawsuit. "It's
all about cost-competitiveness, so that we could continue to be the financially
viable company that we are," he said.
|Letter from Randall MacDonald, Senior VP of Human Resources,
about IBM pension changes:
In recent years, financial and legislative pressures
on employer legacy pension plans have increased around the world. Some
of these pressures have to do with the challenges of funding long-term
obligations; others have to do with changing laws and regulations. Employers
in several major industries -- steel, auto, airlines -- cite the weight
of legacy pension obligations as a hurdle preventing them from successfully
competing in the face of rapid global change.
These obligations are an issue even for financially
strong companies. At IBM, for instance, the company has contributed approximately
$6.4 billion over the past three years to keep our U.S. pension plan
fully funded, a sizeable commitment by any standard.
Just as we have made many big moves in recent
years to transform our company and reshape our business model -- from
acquisitions, like PricewaterhouseCoopers Consulting and leading services
and software companies, to divestitures of our PC and hard disk drive
businesses, to significant changes in how IBM is managed and new capabilities
for IBMers to learn, collaborate and innovate -- so, too, we have evolved
our HR programs.
Today, I am writing to tell you about another
such evolutionary step. We are announcing that, in two years time, we
will stop the future growth of pension benefits in our U.S. defined benefit
pension plans and implement a new 401(k) savings plan -- which will be
one of the richest 401(k) plans in the country. These changes are effective
January 1, 2008. They will not affect current IBM retirees.
What I am announcing today continues an evolution
we began some time ago. For many employees throughout the world, we have
already migrated away from "defined benefit" pension plans
-- which have volatile and unpredictable cost structures -- to more predictable "defined
contribution" retirement plans. This allows IBM to offer meaningful
benefit value for our people at costs we can control over time. And it's
also consistent with, and actually better than, what our competitors
provide. Historically, many have not offered defined benefit pensions;
when they do extend pension benefits, it is through defined contribution
At IBM, the most recent example of this shift
came last year, when we introduced a 401(k) pension program for new hires
in the U.S. and closed the cash-balance pension plan to new hires. This
announcement was widely acclaimed as leading-edge by retirement and industry
experts, and 7,500 new IBMers have joined the company under these new
Based on these competitive benchmarks and regulatory/legislative
trends, IBM plans to adopt this defined contribution approach to retirement
benefits in the U.S. in two years' time. We are providing the two-year
notification to give employees ample time to understand these specifics:
Effective December 31, 2007, IBM will stop the
future growth of pension benefits for current employees in the U.S. Pension
Plan, and move employees to a new 401(k) "Plus" Plan. With
the new 401(k) "Plus" Plan, employees will have an opportunity
to build retirement benefits through automatic company contributions;
a> dollar-for-dollar match on employee contributions of up to 6 percent
of pay for those with affected pension benefits; annuity rollover options
at retirement; and other special features. For those cash-balance participants
who are receiving transition credits, IBM will automatically contribute
the remaining credits for which you are eligible into your 401(k) account
until June 30, 2009, when these credits were previously scheduled to
end. IBM will also provide a special savings award for nonexempt employees
eligible for the prior plan formula, so they can boost their personal
The chart attached below summarizes the planned
changes by each employee group.
With this approach, you continue to earn additional
pension benefits under the pension formula that applies to you, through
December 31, 2007; after that date, your earned pension benefit remains
fully preserved and available for your use when you leave IBM. These
earned pension benefits will increase somewhat, based on interest credits
for the cash balance formula and other factors for the prior plan formula,
but you will not accrue any new pension benefits as a result of future
pay or service after December 31, 2007. Future retirement benefit growth
after that date will come through the new 401(k) "Plus" Plan
The transition to our new plan is designed to
provide the majority of IBMers the opportunity to earn the same total
IBM retirement contribution as they are currently eligible to receive,
depending on their savings rates. It does not, though, mean that all
participants will earn the same overall benefit that they might have
earned had the pension plan continued without change.
In terms of next steps, we will publish additional
information shortly on w3, which will be updated on a regular basis.
A webcast will be made available for all employees on w3 to watch at
their convenience during the next two weeks, and managers will receive
additional information via our managers portal. Later this quarter, we
will announce a wide-ranging set of other tools and services, including
a company-wide financial education program that I believe will be the
most extensive and robust program of its type ever undertaken by any
Change is never easy, but it is inevitable. Indeed,
it's what this company has always been about. IBMers have continually
reinvented IBM throughout our history -- from products, to processes,
to management systems and strategies.
Today's announcement is about adapting our retirement
plans to changing realities and doing so because more dynamic and innovative
new opportunities have become available. Our new approach, in fact, should
do a better job of preserving and extending those, aligned as it is with
the realities and opportunities of the 21st century.
We will continue to provide you with more information
in the days ahead.
Senior Vice President, Human Resources
comments on a statement in Mr. MacDonald's letter. Full excerpt: "Change
is never easy, but it is inevitable. Indeed, it's what this company has
always been about," MacDonald wrote to employees yesterday." Perhaps
we need a shareholder proposal to cap executive compensation. The "change" would
not be easy, but "it's what this company has always been about..." It
would certainly save the company Billions of $$$$ over the next ten years
and cause the stock price to rise. IBM is up about $2.00/shr today in response
to the pension plan change.
- In a Yahoo!
message board post, Janet Krueger comments on this question
from another message board participant: Janet, have
they defined what "earned
pension benefit" means for an employee retiring with less
than 30 years? I suspect this is where the company's financial savings
come from. Ms. Krueger's full response follows: You've seen as many
details as I have... If I was still an active employee, I would be
doing the following:
- Visiting the NetBenefits
site and printing off a copy of what my
vested rights are now, what they will be on 12/31/2007, and what they
would have been when I had planned to retire (if the site still supports
- Sending a note to my manager, asking for more details.
- Talking to the nearest Alliance organizer to find out if they are
looking at a fresh organizing drive so the new plan could be formalized
into a contract, voted on, and only changed on the formal negotiating
schedule (check www.allianceibm.org for details).
As someone collecting an IBM pension, I am sending
off a new round of letters to my representative and senators to remind
them how important ERISA is to American retirees, and asking them to please
ensure that the final version of the pension reform act does NOT allow
companies like IBM, who have already taken action to freeze the pension
plan for current employees, are not given an option of cashing out all
Do NOT blissfully assume this is the last change
we'll see from IBM; there is still a $48 billion pot that the executives
want to get their hands on...
- Communications Workers of America (CWA) Press Release:
Assaults Employees' Retirement Security. Full excerpt: Following
is a statement by CWA President Larry Cohen on IBM's plan to freeze
The announcement by IBM Corp. that it is freezing
the pensions of some 120,000 employees is outrageous, even by the "Gilded
Age" standard of today's corporate executives.
Just over the past few weeks, we've seen some
of the richest corporations eliminating pension benefits wherever they
can, just because they can. Verizon recently froze pensions for tens of
thousands of management and unrepresented workers. IBM's action sends
an equally chilling signal not just for current workers, who now have
lost their retirement security, but to the future generation of workers
who are penalized before they ever start their first job.
In the United States, increasingly, workers are
required to bear the costs and the risks for their retirement and health
care security. But they're also forced to pay the costs for the bad business
decisions that push companies into bankruptcy, like United Airlines and
Delphi, not to mention the misdeeds of corporate lawbreakers whose actions
have wiped out 401 (k) retirement savings at companies like Enron, WorldCom,
Curiously, the retirement packages of most top
executives remain untouched, as we've seen at United and scores of other
companies. It's not yet clear that the IBM change affects the executive
supplemental retirement plan at all.
Meanwhile, as defined benefit pensions go by the
wayside, we have a White House that wants to kick away another pillar
of retirement security by radically changing Social Security from a guaranteed
social insurance program to a risky Wall Street-based scheme.
If Congress is interested in real pension reform,
it will begin by encouraging the establishment of defined benefit pension
plans that provide true retirement security for working families.
This downhill sled ride for U.S. workers will
continue until the United States joins the mainstream of global democracies
and ends the attack on workplace democracy and workers' rights. When IBM
makes this kind of announcement in Europe, and now much of South America
and Asia, it must negotiate with employees. Contrast that to the United
States, where IBM employees have no bargaining rights and therefore no
voice. CWA encourages our thousands of members at Alliance@IBM
out to elected officials at every level of government.
### More than 6,000 IBM employees are members
and associate members of CWA Local 1701, Alliance@IBM, an association
that fights for workplace, benefit and bargaining rights for IBM workers.
- Alliance@IBM Press Release: IBM
Pension Change 'Yet Another Cut in Employee Benefits'. Full excerpt:
For More Information:
Lee Conrad, in Endicott, N.Y., 607-658-9285
Endicott, N.Y. -- At the end of the day on Jan.
5, IBM announced to the media, before notifying employees, that the IBM
pension plan of $48 billion will be "frozen" in 2008 and the
employee 401(k) plan enhanced.
"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, CWA Local 1701,
the IBM union organizing campaign.
The termination of the pension plan is expected
to save the company $3 billion by 2010 according to IBM. No statement
was made on how this change affects executives' Supplemental Executive
Retirement Plan (SERP).
Linda Guyer, an IBM Software Group employee and
president of the Alliance@IBM said, "This is just one more top down
edict from corporate headquarters that leaves employees with no say. We
have seen this far too often. If a union contract was in place, changes
as significant as this to employee retirement would have to be negotiated.
It's time for employees to fight back."
Earl Mongeon, an IBM Burlington employee and vice
president of the Alliance, stated that for many long-time employees, the
pension freeze is a reversal of an implied promise. "The company
just pulled the rug out from us. The $48 billion in the plan is ours,
because we built this company."
The Alliance@IBM is deeply concerned that, considering
the volatility of the stock market and recent downturns that have wiped
out retirement for many, the move to retirement based on 401(k) savings
could be disastrous for many employees, especially those not savvy in
"IBM, like so many other companies, is either
eliminating or not offering the stability of a pension plan, or even basic
benefits. The signs are already there that the next generation of workers
will be in worse shape financially than this one. It is obvious that corporations
of today do not value the work employees do," stated Conrad.
- Lee Conrad, Alliance@IBM National Coordinator, comments
on the changes in a Yahoo!
pension board post. Full excerpt: The whole trend of declining
pensions and benefits is a take away. Think of the next generation
of workers (your kids)who will have less than we did. Except of course
the kids of Corporate executives. Don't people remember the beating
people close to retirement took in their 401k's a few years back. The
market is volatile. Oh and by the way 401k's are another way for companies
to get your money for investing while dangling out the carrot. Class
war? You bet--and we are losing!
- In a Yahoo!
message board post, Kathi Cooper, of Cooper
v. IBM fame comments on the
changes to the pension plan. Full excerpt: It's about greed. It never
was about employees old age retirement. IBM needs to keep their hands
on our trust. With a frozen plan, they stopped the tub from draining.
Those on the old plan get hurt because the old plan was designed
to accrue the largest benefits from 25-30 years of service. Those
on the new plan (cb) get hurt because they lose their daily (miniscule)
accrual. And MOST are too old to get a different job. MOST are out
Next step? My guess is they will move everyone's
present value into their enhanced 401K. That seems to me to be the next
logical move, to keep the money in their pockets and not ours. (and you
know what happens to your $ when we use present value!)
Angry? Nervous? Scared? THINK about the Alliance
. (my opinion only)
message board post by Janet Krueger. Full excerpt:
If there are any active employees reading this who would be interested
in discussing their reaction to the changes with a national reporter,
on the record, please send
me a note with your name, your location,
and a phone number where you can be reached... I've got several reporters
looking for people to interview!
- Yahoo! message board post by "ibmamoeba": Pension
Changes/my numbers. Full excerpt: My 30th service anniversary falls
within first quarter 2008. So as I understand it my pension will be
frozen on 12/31/207. Estimator shows approx. a +29.5 difference using
dates of 12/31/2007 and one day after reaching my 30th service anniversary.
Lets see how the math works in my case-the difference
per month for my expected lifetime comes out to slightly over $150,000.
So, after working for IBM 29.75 years they break their promise and
reduce my retirement by +30% within 90 days of being vested.
Now for my rant...For the past 28 years I have
done my job and placed this job in front of family and personal considerations
only to have this happen after obtaining 99.6% of my personal goal of
reaching 30 years. I believe I would be less upset being layed off than
being LIED to after all these years. My dictionary defines a lie as a
false or deceiving statement.
What other surprises are lurking just around
the corner? Now back to the regular scheduled programming...
- "eenemene" comments. Full excerpt:
Think of it not as a "lie" but as a giant billboard of
promises and advertising about all those great ibm benefits...
but with a little legal disclaimer you need a microscope to read
in the bottom corner about those nasty "legal documents".
They always could have terminated the plan, but ("wink, wink")
who ever thought they really would have with all that great stuff
we were fed the past three decades.
I'm still wondering if you looked at a distribution
of financial impact of this decision as the Y axis and age as the x
axis, I bet one could argue that the targeted impact has the effect
of an age-based action. Of course that information must exist in confidential
databases somewhere just waiting for a discovery procedure.
I expect my financial impact to be about the
same as yours... started several months after you did with the firm,
made many sacrifices etc etc. Like I said, the brunt of this is most
likely to be felt by folks in a very narrow age bracket of around 50-something.
Look on the bright side, with all the money
the company will save, maybe we can expect 2.5% raises every
other year instead of 2% raises every other year. Certainly that
will help us 26 to 28 year folks a lot (right).
Cooper comments. Full excerpt: Lies? How
about illegal? What IBM did to us in 1999 and 1995 was illegal.
We have pretty much settled 1995 but IBM is appealing us on the
1999 part of the case. This is not the first time IBM lied to you.
You've been lied to and screwed more often than this. You do know
about the pension suit, right?
finance board post by "thetrendsnotyourfriend".
Full excerpt: I think it is painfully obvious that most people on this
board that pump IBM don't have a clue about the business or the people
who run it. Nor, do they understand the dedication that has been provided
by many of us who have stuck with this company for nearly 30s years.
Over the past 12 years, I have watched my annual
estimated pension (for retirement in 30 years) drop from $70K to $42K
to $30K. During that period I have also watched executive salaries and
compensation more than double. I don't have much in terms of expectations...only
that the company keep their side of the bargain and pay me based on the
compensation plan that has been offered to me during my years with the
company; and based on my continued performance which has never been rated
anything less than "exceeded expectations".
When and if Sam is shown the door, I don't think
you'll see anyone taking anything away from him or his golden parachute.
Is his contract so much more sacrosanct than the "contracts" we
the workers have with this company.
Given my 25+ years of contributions to one of
the largest and most profitable companies in the world, is it too much
to ask that my 30 year pension be more than 1/4 of my salary, especially
when I will be expected to pay nearly 25% of it out to cover my retiree
Is it too much to ask that if I'm within 5 years
of retirement, and on the already revised pension plan that my pension
be what their estimator tool told me it would be at this point in
the game? Am I expected to put off my retirement simply because the executives
in IBM aren't able to cash in on their excessive stock options.
You don't have to be much of a financial analyst
to know that what is effecting IBM stock has little to do with the
already reduced benefits plans that its workers receive. Watching the
executives shower themselves with stock options and use the companies
cash to buy back shares to avoid to dilutive effect of this is growing
kind of old, and the multiple that the market bestows on IBM stock is
reflective of that.
I believe the changes IBM is making to the pension
this time around are positive for younger employees who are on the cash
based plan, and interestingly enough provides incentive for IBMers already
retirement eligible to stay. It is those of us in the middle who are being
squeezed by the current plan. I doubt anyone in IBM HR was even smart
enough to realize it prior to announcing this such a horrendous change.
finance board post by "ibmoptioneer". Excerpts:
An investor that doesn't stand up and be counted to ensure their feelings
are heard by the management appointed by the Board of Directors which
creates what appears to you as an adverse environment for investing
has essentially abrogated their duties as an investor. Investors are
owners, yet investors have given the power and responsibilities of
owning to analysts and executives through boards to create this problem.
You can talk all you want about professionalism,
helping the company and all that BS, but it's you the investor that has
created the employee environment and no one else is to blame for it. See
you at the next Annual General Meeting. Wonder why all the security, why
investors are kept away from executives and why questions and questioners
are cut off when they get too close to the truth. It's a great investor
- "madinpok" comments
on how things might have been different if IBM U.S. had a union.
Excerpts: Without a union, IBM will continue to sell divisions to
companies like Lenovo and Hitachi and make whatever deals they feel
like as to the future of the workers. With a union, the employees
can have some say as to what happens and how they will be treated
if a plant is closed or work is moved to other countries.
In the case of the MTA workers in NYC, they demanded
that there would be no changes to the pension plan and they won.
In the case of the Delta airline pilots, they
VOTED to accept a pay cut rather than risk driving the airline out of
business. Hopefully, this is a temporary pay cut to help the airline get
back on its feet and not a permanent one. The key here is that employees
got to vote and the company could not unilaterally impose the pay cut.
When IBM decided to cut pensions in 1995 by switching
from the S&E plan to the PCF plan, and cut pensions again in 1999
with the C-B plan and cut them yet again with yesterday's announced freeze
of the pension plan, did they ask the employees to vote if those changes
were ok? I can see the value of a union. Can you?
- In a Vault
message board post, "Frank_Reality" comments
on the IBM Supplemental Executive Retirement Plan (SERP). (Editor's
note: It isn't clear yet whether the IBM SERP plan is affected by the
latest changes to the employee pension plan). Full excerpt: No mention
of the SERP being frozen. The Gods running the place are so special.
- S - Self-serving
- E - Executives
- R - Raping other employees'
- P - Pensions
Greed Incorporated strikes again. Employees don't
- In a Yahoo!
finance board post, "eddyshimmy" comments
on the pension plan changes. Full excerpt: You said: "I have
been at IBM for 6 years(since 2000) I am fully vested. So
what have I lost?"
The answer is YOU probably haven't lost anything by virtue of the fact
you have only been there six years.
The guys who lose are the mid 40 to early 50 year
olds, who have spent their entire career under a defined benefit (DB)
plan. The DB plans tend to gain the most value in the last few years of
your career. The defined CONTRIBUTION, or Cash Value, or 401(k) type plans
tend to have the most value on the EARLIEST contributions (as they have
the longest time to build up equity.
Both approaches are perfectly fair. What is not
fair is the buzz saw that the guys late in their careers experience
when it is too late to get the thirty years of interest on early contributions
(ala Cash Value or 401(k) , and they are robbed of the soon to be
realized significant growth experienced at the END of the DB plan.
There were significant age discrimination issues
on these types of conversions in the past. The IRS (don't ask me wy this
is in their world, but it is) recently passed rules changes that makes
these types of conversions easier to do. I am not sure if the IBM one
screws the guys who are ten years from retirement or not, but it smells
an awful lot like the type of scenario that does.
comments. Full excerpt: You probably haven't lost
much, because you're young and pensions weren't going to last until
you retired anyway. The ones who have really lost a lot are the
people who are in their 40s and 50s and bought into the idea that
IBM was going to take care of them. Those people are screwed, and
they can't do anything about it. You, however, can move on. Just
make sure that your next employer pays you enough so that you can
save a lot of money for your retirement on your own.
- Yahoo! finance board post: Putting
the pension rip off aside. By "thetrendsnotyourfriend". Full excerpt: When the smoke
clears, the market will assess this appropriately. IBM has no ability
to increase revenue, no ability to improve product cost, and no ability
to development new and innovative technology. If all this company is
capable of doing is increase earnings by raping its own employees,
the stock will be judged accordingly. IBM had huge savings when it
switched to the Cash based pension plan...which was revealed during
the class action suit that IBM lost. Just follow the declining share
price from then to now.
- Yahoo! finance board post: "T.
J. Watson Sr." by "seymour_cash".
Full excerpt: Would T.J.Watson be rolling over in his grave over the
pension freeze? IBM lied about medical coverage for retirees. Now they
have lied about a pension benefit. Loyalty and morale will fade further.
- In a Yahoo!
message board post, "chz_whiz" replies
to Randy MacDonald's letter. Full excerpt:
Hey, Randy -
Got your note. Thanks a bunch. Got a second? I'd
like to ask you a few questions for clarification. Shouldn't take more
than a couple minutes. Since I'm not the NSA, I'll just post my side of
the conversation, not yours. OK? Great! I thought you'd see it that way.
Your note said that the company had contributed
approximately $6.4 billion to the pension fund over the past three
years to remain fully funded. Now $1.7B of that was to set aside funds
for the class award, right? Kathi caught the execs with their hands in
the cookie jar, right? $1.7 B is a pretty good chunk o' change, no?
Now the other $4B was because the stock market
went down for a very unusual three consecutive years, right? Stuff
happens. So now you're moving all investment risk from highly paid
IBM and non-IBM professional investment advisers to IBM employees
who have other day-to-day jobs. Is that correct? So we're moving away
from, to use your words, "defined
benefit" pension plans – which have volatile and unpredictable
cost structures – to more predictable "defined contribution" retirement
plans. Sure is comforting that an IBM systems engineer will invest
better than than a professional investment adviser.
OK, you said IBM had to contribute $6.4B over
the past three years. $1.7B was from the cookie jar incident, and
the other $4B was from stock market declines. Stuff happens.
How much did the company contribute to the trust
fund during the 90's decade? They didn't? Oh, they could just pull funds
out of an overfunded position due to stock market gains? Great!! And they
could show that as corporate profits? Fantastic! And corporate profits
generate executive boni? Wow!! Isn't that just absolutely ducky?
OK, and you're "providing the two-year notification
to give employees ample time to understand" the specifics of the
pension change. Two years? Are IBM'ers slow to comprehend, or what?
Your note said that the change "does not
mean that all participants will earn the same overall benefit that they
might have earned had the pension plan continued without change." So
I guess that means that some of the participants will get burned, huh?
Badly burned? How burned?
Your predecessor, (remember "Socks B."?)
had said that previous pension changes were not to save money for
the company; they were because the mobile work force wanted the changes.
The mobile work force apparently wanted to be mobile, laid off, down-sized
and out-sourced. I appreciate your sincerity in admitting that these
changes are to save the company money.
Since this is saving money for the company, the
savings must come from somewhere. Could you identify the employees it
is being taken from? Oh, I didn't think you would.
Maybe not the employees (who cares about them?)
but it sounds like the corporation and executives have been doing well.
Where to from here?
You've estimated $3 billion in savings through
2010. What happens after that? After 2010, the company won't have nearly
as much of the trust fund left to generate vapor profits (and subsequent
vapor profits). The actual investment will be transferred into the hands
of employees. The company won't have as much income, but they will still
be paying (in real $$$) the 401(k) Plus contributions. What will you do
Oh yeah; nearly forgot, You're 56 years old (according
to Forbes). So in 2010, you'll be 60 and moving from IBM to your
next opportunity…it'll be somebody else's problem.
Randy, thanks for your candid answers. Appreciate
all you've done for us.
Your friend, cw
finance board post by "ibmaccountant". Full
excerpt: Sam [another finance board participant], I agree 100% with
you except that you are making an uninformed assumption: that IBM is
not going bankrupt. Do your due diligence as an employee or as a shareholder,
or both, but make sure you understand the trends and what percentage
of that alleged 9B a year is truly from actual customer revenue as
opposed to "traditional
accounting gimmickry" like currency, pension vapor accounting,
etc. and new forms of misleading investors.
If there is one thing IBM employees and shareholders
should have learned from the 1995, 1999, 2004 and 2006 pension actions
and the 4Q01 and 1Q05 financial reporting event is that you should expect
critical information to not be reported except possibly in the fine print
and misleading statements highlighted.
The stock is languishing not because of performance,
but because of loss of trust and confidence in the Board and senior management
team. Short term traders love this and will pump and dump the stock continually
on this board and IBM is a great short term play (lay) but the value investor
for the long haul as well as the long term prospects for this company
are not that good.
As I've said before, caveat empore. Don't trust
the actual publicly stated reasons for the pension change, look for the
REAL reasons as to why they did it now and not later or before. I'll surmise
that in that 270 million charge and 500 million accounting vapor profit
is much more hiding, possibly a drying up of the IGS pipeline or worse
news. You've been warned. The stock moved only a fraction of what it should
- National Bureau of Economic Research: Executive
Abstract: Because public firms are not required to disclose the monetary
value of pension plans in their executive pay disclosures, financial
economists have generally analyzed executive pay using figures that
do not include the value of such pension plans. This paper presents
evidence that omitting the value of pension benefits significantly
undermines the accuracy of existing estimates of executive pay, its
variability, and its sensitivity to performance companies. Studying
the pension arrangements of CEOs of S&P 500, we find that the CEOs'
plans had a median actuarial value of $15 million; that the ratio of
the executives' pension value to the executives' total compensation
(including both equity and non-equity pay) during their service as
CEO had a median value of 34%; and that including pension values increased
the median percentage of the executives' total compensation composed
of salary-like payments during and after their service as CEO from
15% to 39%.
- "madinpok" explains IBM's "Future Health
in a Yahoo!
message board post. Full excerpt: Employees who are not first choicers
and we hired before 1/1/04 (I think I got that date right) have a Future
Health Account. Employees hired after that date have no retirement
medical coverage paid for by IBM, although they have "access" to
buy coverage from IBM out of their own pocket.
The FHA is a fictional account to which IBM contributes
$2500 a year from age 40 - 50 and earns a low rate of interest. To use
it, employees must remain employed until age 55 (except for second choicers,
who can retire earlier).
Once you leave IBM, the money in the FHA account
can be used only to buy health insurance from IBM at whatever rate they
want to charge you. This year, employee+spouse coverage is priced at about
$14,000. Since most employees will have somewhere around $35k in their
account when they leave IBM, that is enough for less than 3 years coverage.
Since the cost goes up every year, it will buy even less in the future.
Once the money in the FHA account runs out, you have to pay for it out
of your own pocket. For someone who leaves at age 55, that means they
will probably have to pay for 7-8 years of their own coverage before being
eligible for medicare. So they will spend at least $100k out of their
own pocket, and probably much more as medical costs continue to rise.
- In a Yahoo!
message board post, Janet Krueger explains
how IBM employees fit into one of three groups. Excerpt:
- A first choicer is someone who was within 5 years of retirement
eligibility on July 1, 1999 -- these people, when they retire,
can still participate in what is left of IBM's promise of life
time health care benefits for retirees as long as they are willing
and able to pay the rapidly increasing retiree contribution.
- A second choicer is someone who was over age 40 AND had over
10 years of service on July 1, 1999 -- these people were forced
to switch to the cash balance plan, but then were magnanimously
given the option to revert back to the 1995 plan on Sept 17,
1999 the day before the HELP committee meeting
on cash balance plans took place in the U.S. Senate. These people
were left with the Future Health Account (nicknamed the Future
Hell Account by some) which cannot be accessed until the employee
qualifies for full retirement and turns 55, which can only be
used to purchase roughly three years of health insurance from
IBM, and which never vests and can be eliminated at any time.
- The last group you may see referenced from time to time is
the 'no choicer' group that was stuck in the cash balance plan
and will most likely never get any retiree health benefits.
- BusinessWeek (July 29, 2002): An
Excerpt from The Great 401(k) Hoax. Authors William Wolman and Anne Colamosca believe
the recent problems are just the beginning. Excerpts: For people who
are approaching retirement, 401(k) plans haven't yet proven to be the
wealth-creating machines many had hoped. Steep and prolonged declines
in stocks have eaten away at many people's retirement savings. [...]
And, of course, most employees now realize their retirement income
is more uncertain with a 401(k) than it would have been with the so-called
defined benefit plans popular in the past -- where employers promised
to provide a set monthly pension, no matter what. [...]
In the midst of this crisis of confidence comes
The Great 401(k) Hoax: Why Your Family's Financial
Security Is at Risk, and What You Can Do About It, by William Wolman and Anne Colamosca
(Perseus Press). The book contends that the woes now plaguing 401(k)s
are just the beginning. In the introduction, reprinted below, the authors
contend that this "ugly combination of letters and numbers" will
prove to be "the greatest systemic financial hoax ever perpetrated
on an unsuspecting public."
- Yahoo! finance board post: Let
the Lawsuits begin.
By "thetrendsnotyourfriend". Full excerpt: Should be no
surprise to anyone that IBM took its latest shot at screwing over
some of its older workers with the latest pension plan changes. This
is similar to IBM's opening salvo for the cash based pension plan
changes several years back. Certain not to hold up under the pressure
of legal action. As with the last changes, expect a short term blip
up on the stock, then as logic prevails, watch the stock drop on the
prospect of growing dissent internally, legal action and the realization
that in the long run this will only cost the company. You have to
begin to wonder whether or not this management team will ever get
anything right. And I'm long this stock...argh.
finance board post by "bye_low_sell_hi". Full
excerpt: What a disaster for many employees who are 3 or more years
out from maturing their IBM pension. ALL the money IBM will "save" is
money that long-term employees were counting on getting. Those folk
are the ones being robbed - its up to them to fight with a class action
age-discrimination law suit.
- Raleigh News & Observer: 'F'
looms for IBM schools network. By Tim
Simmons. Excerpt: State education officials are threatening to cancel
a multimillion-dollar contract with IBM because of problems involving
a sophisticated computer network. The program, NC WISE, has been dogged
by glitches since it began six years ago. It's supposed to give schools
a single place where a wide range of information can be entered and
analyzed. Through the system, schools can create individual report
cards or track entire groups of students. It offers grade books for
teachers, electronic transcripts for colleges and data for parents,
from test scores to attendance records. But teachers say it has a tendency
to crash and freeze to the point where some have dubbed it "NC
- Yahoo! message board post by "sby_willie": let's
hope our "variable pay" or "bonus" doesn't decline again
for 2005 results. Full excerpt: Let's hope our "variable pay" or "bonus" doesn't
decline again for IBM 2005 results. But I think it will be less than
before (2004 results) due to:
- More hard working IBM employees being pigeonholed as "3" PBC'ed.
- More and more hard working IBM employees that are "2" and "2+" PBC'ed
receiving the minimum "variable pay" or "bonus" payout
(maybe 2% or so?).
- More and more IBM business units who had
set unreasonable measurements and business attainable/result
metrics for 2005. The "2005
Scorecard" will bear this out in most, maybe all, IBM business
units not receiving at least a 100 score.
- Have to "bonus pay
and retain" the top IBM executives since they have been leading
and setting company direction leading to stock price results/return
of approx. -14% YTD. Redirect some employee bonus pay to the
executives to reward the executives for their "great work in a
tough, competitive, 2005 I/T business climate".
I hope I am absolutely wrong on all four of points.
Happy New Year to all. But I hope it really is.
- Barron's, courtesy of SmartMoney.com:
Don't Know Jack. By Jonathan R. Laing. Excerpts: Jack Welch, General Electric's
demanding former chief executive, delighted
in setting the bar high. When he stepped down a few days before Sept.
11, 2001, he left his successor, Jeffrey Immelt, the challenge of matching
a remarkable string of years of strong profit growth. What was most
remarkable about those years, however, wasn't apparent to anyone outside
the company until recently. The bar might have been set artificially
During the last five years of the Welch era, ended
in 2001, GE's reported earnings jumped from 72 cents a share to $1.37,
a rise of 65 cents a share, or 90.2% — spectacular for a behemoth
like GE. But without a massive under-reserving at its reinsurance unit,
the company would have shown a cumulative earnings gain of just four cents,
comments on the Yahoo! finance board. Full excerpt:
Kinda like IBM stock, isn't it. Gerstner leaves IBM and Welch leaves
GE and both stocks suffer from all the issues surrounding the tenure
of these CEO's. Very similar to AMEX and RJR after Gerstner left
them as well.
- New York Times: The
Machete Budget. By Bob Herbert.
Excerpts: If Congress were merely useless, the country would be better
off. But it's worse than useless. In the iron grip of a Republican Party
that is almost slavishly devoted to the Bush administration, it's downright
destructive, especially to the interests of poor and working people.
Consider the budget that will soon be sent to
the president for his signature. Members of the House and Senate
have agreed on legislation that achieves something approaching $40
billion in savings over five years primarily by hammering the sick,
the poor, the elderly and college students and their families. This
is the same Congress that genuflects each time the president asks
for yet another gift-wrapped tax cut for the wealthiest among us.
The textbooks tell us that the U.S. is a representative democracy,
but only the upper strata are truly represented. [...]
The largest chunk of "savings" in the
budget bill would come from student aid. With the special interests driving
up in 18-wheelers to haul away our tax dollars, Congress and the administration
apparently felt that mugging college students would be a good way to recoup
a bit of those losses. "This is the biggest cut in the history of
the federal student loan program," said David Ward, who heads the
American Council on Education, an umbrella group for public and private
- Seattle Post-Intelligencer: Before
taking a buyout, consider the costs. By M.B. Owens. Excerpt: In
today's ever-changing business environment, in order to reduce overhead,
employers are often faced with offering employees a buyout in the form
of early retirement. Several years ago, one of those employers was a
nationally known tire manufacturer. It was experiencing a significant
decline in revenue because of issues with some of its tires. The company
decided to use buyouts for some employees as an option to reduce costs.
Brian (not his real name) was one of the employees offered a buyout,
with different options to select from. Having worked for the company
for more than 30 years, he had a lot to think about.
- Dallas Morning News: Lower-income
workers will get hit hardest by higher premiums. By Pamela Yip. Excerpts: On workers' 2006
wish list is a pay raise that will exceed the higher costs they're
having to pay for health care. On average, forecasters say, they'll
get it, even if it doesn't feel like it. But, not surprisingly in our
society, lower-wage workers will get hit hardest, with the smallest
raises after health care inflation is factored in. Average pay increases
for 2006 are projected to be around 3.6 percent, according to Mercer
Human Resource Consulting. [...]
Meanwhile, workers are expected to shoulder a
10 percent increase in annual health insurance premiums, according to
Towers Perrin, a management consulting firm. “In 2005, health insurance
premiums rose by 9.2 percent, which was three times the increase in wages,” says
Larry Levitt, vice president for communications and online information
at the Kaiser Family Foundation, which studies health care issues. “Certainly,
there are no signs of that abating. It's very likely that in 2006, health
care costs will continue to squeeze out wage increases.”
- Hewitt Associates: Best
Employers in Canada. Excerpt: "Best
Employers' 'people practices' support their business goals and are
communicated and executed effectively." Organizations on the list
come in different sizes, from different industries, from all across
Canada - in 2006, 24 from Ontario, 14 from Western Canada, seven from
Quebec, one from Nova Scotia, and one represents a consortium of five
companies from across Canada. A number following the organization's
name indicates the number of years that it has made it onto the Best
Employers list. Thirty-seven organizations on this year's list appear
on previous years' lists. Could your organization make the list? Take
a look at who made it - you may be surprised. (Editor's note: IBM has
not been on the list since 2000).
- Computerworld: 100
Best Places to Work in IT 2005. Excerpt:
These select companies have can-do workplaces where cool projects and
competitive pay are standard fare -- some even have lavish perks. Their
strategy seems to be working: This year's survey of more than 20,000
IT workers shows upticks in job satisfaction and morale. (Editor's
note: IBM is not on the list).
- Associated Press, courtesy of the Chicago Tribune: Abbott
suit gets class-action status. Excerpt: A federal judge has granted
class-action status to a lawsuit accusing Abbott Laboratories Inc. of
cheating older workers out of retirement benefits when it spun off its
hospital equipment business in 2004. The ruling Friday by U.S. District
Judge Robert W. Gettleman allows the suit to cover all Abbott employees
shifted to newly created Hospira Inc. between Aug. 22, 2003 — the
date the spinoff was announced — and April 30, 2004. Also included
are Hospira employees who were eligible to retire from Abbott when their
jobs were eliminated. The plaintiffs claim North Chicago-based Abbott,
a manufacturer of pharmaceutical and medical products, spun off the unit
containing many of its older workers because they were near to claiming
rich retirement benefits from Abbott.
- Richmond Times Dispatch (courtesy of Blue Cross, Blue
Shield Health Issues): Employee
cost of health plans vary. By Tammie
Smith. Excerpts: The new year means the start of a new benefits year
for many employees. The luckiest employees will see no increases in health
insurance costs. Others face higher monthly premiums, higher co-pays
for office visits and drugs, deductibles where there used to be none,
co-insurance on top of deductibles and new "consumer driven" health
plans that couple high deductibles with health savings accounts. "It's
just not understanding co-pays anymore," said Sharon Jahn, benefits
director for the VCU Health Sys- tem, which employs more than 5,000 people.
- Washington Post obituary: Frank
Cary; Drove Personal Computer Creation for IBM. Excerpts: Frank
T. Cary, 85, the chairman and chief executive of IBM who pushed for
the creation of the company's once-dominant personal computer, defended
the giant business against a 13-year-long federal antitrust lawsuit
and helped launch a decade-long effort by U.S. corporations to end
apartheid in South Africa, died Jan. 1 at his home in Darien, Conn.
His wife of 63 years, Anne Curtis Cary, described her husband as a
quiet, down-to-earth person who would prefer a bare-bones obituary,
if any at all. She declined to provide a cause of death. [...]
Mr. Cary was not solely concerned with financial
goals. According to IBM, he joined General Motors chief executive Tom
Murphy and the Rev. Leon Sullivan, a General Motors board member, in 1975
to recruit 21 top American corporate leaders for a decade-long effort
to end apartheid in South Africa. The meeting led to the creation of the
original Sullivan Principles, which committed businesses to equal and
fair pay practices, training of nonwhites for management positions, and
improving the quality of life for nonwhites in housing, transportation,
school, health and recreation facilities.
- Computerworld: H-1B
workers earn less than American counterparts, report says. The visa holders are supposed to be paid
prevailing wages. Excerpt: H-1B visa IT workers earn on average $13,000
less than their American counterparts, according to a study of U.S. Department
of Labor records released by the Center for Immigration Studies. H-1B
workers are paid less, even though the law requires that they receive
prevailing wages, according to the study by John Miano, a former chairman
of the Programmers Guild, a group that has been critical of the H-1B
program. Miano’s report compares wage data that employers file
with the Labor Department against U.S. wage data collected by the Bureau
of Labor Statistics. While employers must attest that they will pay prevailing
wages on a form called the Labor Condition Application, Miano says in
the report that agency officials haven’t been required to verify
|Vault Message Board Posts
3: the principals/associate partners" by "byebye2". Full excerpt:
Point 3: The high potential associate partners/principal consultants
(level 5) really got the raw end of the deal. No (mentionable equity),
no opportunities on a real partnership (read equity). Therefore 70%
of them left between 2002 and today. Again IBM shooting itself in the
foot. They believed the fairy tale that the Partners (Chiefs) at PwC
were doing all sales and project management and the rest were just
dumb "indians" that
could be replaced with ..."Indians, but than from India". Or
Cheap Mexicans, Canadian, Chinese and other PM's from low wage countries...
Now IBM BCS is search extensively for real project management talent,
but IBM HR recruits less talented PM's every round of recruiting.
on stekker1" by "byebye2". Full excerpt: Stekker1,
you either are a IBM HR person or may ask what you dream of at night?
Last year the break-even point was not yet reached where the partners
could make more money elsewhere. Now IBM (2000 Ex-PWC) partners make
$180 salary + $200-$400k vesting = $380k-$580k with vesting. After
vesting they only make about $200k, whereas elsewhere they can still
make $250base + $200k bonus= $450k. Obviously it is not a pretty
internal PR picture that the partners make $500k while the consultants
make below market while working above market hours on challenging projects.
No or little raises the last 4 years because IBM it still paying the
Salary - you have no idea what your (sic) talking about" by "mvp21". Full excerpt: IBM Associate Partners make that
- there isn't an ex-PwC Partner making anything less than $200k in
base salary. And that's the low end. Average is closer to $300k.
on their band" by "byebye2". Full excerpt: Their
salary is tied to their band. Partners in the D band do make less than
$200k. But you are right the partners in the C and B bands do make
around $300k, but this is part of the ex-PwC employment legacy. Newly
minted BCS partners don't make the $300k. And the $300k is only sustainable
for the B level partner execs. So the group and industry leaders they
will still make $300-$500k but than you are talking about managing
hundreds of consultants.
senior partners got a good deal" by "byebye2".
Full excerpt: Actually only about 80% of the IBM BCS (ex PwC) partners
got a bad deal: the most junior partners that were partner less than
6 years. But these were actually close to 80% of all partners. The
senior partners (Industry and Group leaders) actually received a pay-off
to retire very comfortably (read 7 figures) after spending 5 years
with the big blue company. Don't pity them. They are also IBM C-level
or B-level execs.
Point" by "Dose of reality". Full excerpt:
The post acquisition compensation economics were a catastrophic failure,
driven by the Mckinsey study that came to the idiotic conclusion that
in the 2002 environment the acquired staff "would have no place else
Of course, the time horizon of the study couldn't
have been more than 6 months. The problem was that screwing with compensation
has a cumulative effect on people, and the groundswell of "I'm outta
here" was bound to build up until the market inevitably rebounded.
Even in the short term, the most marketable and most prescient talent
bailed out pretty quickly, and many of those that remained through the
first year reduced their efforts from the "partner opportunity" inspired
energy that they had infused into PwC.
The tragic part is that it wouldn't have cost
that much to maintain and energize the roster. Normal salary increases,
and more bonus differentiation of top 40-50% performers would have been
more than compensated for through hard and soft benefits of lowered attrition,
and higher productivity and project/proposal effectiveness. Not only did
they squander a golden opportunity, but now, with several years of bad
compensation history, it's even harder to recruit top talent. We have
to pay a premium just to overcome the stigma of our reputation.
I have no doubt that an objective analysis of
this would show this to be a real economic drain in the hundreds of millions,
if not billions. The problem with this is how do you quantify the lost
opportunity that comes from having replaced an up an coming thought leader
or experienced PM with Sanjeev and his merry band of JIT trained linguistically
challenged offshore coders? They look great on hourly rate year-over-year
labor cost comparisons, but there are a few other metrics that might be
more important to a premier Business Consulting Services company!
Correct" by "Dose of reality". Full excerpt:
Depending on the distance, flight availability, and client requirements,
you may have to fly out on Sunday. Other than that your assumptions are
correct. Car rental may be included, but you will be expected to share
a car. We get reimbursed dollar for dollar from the clients, plus we get
a kickback from the "preferred" airlines and hotels that we
take into income, so we actually make money on the deal. Shhh! don't tell
the clients or they may get upset! Of course, what that means for you
is that you will be required to take multiple connection flights and stay
at marginally acceptable hotels that are a long distance from the office
so we can be sure to use the "preferred" vendors!
meeting cancelled" by "20yribmvet". Full excerpt:
Now that those in the ivory tower have pillaged my retirement by $300,000,
they are continuing their cost cutting by canceling the annual STGU
in Las Vegas. Everyone's plane tickets have been expensed in December
and that IBM will spend millions at this point to NOT have a meeting.
Is the financial outlook of the company worse than they are letting
on? There is no vision for this company. Watson is spinning in his
Mary Sunshine with a Brown Nose" by "Frank_Reality".
Excerpt: I've NEVER seen the IBM executive ranks make any significant
cuts to their benefits and compensation, while forcing non-executives
to repeatedly suffer cut after cut after cut.
- Ever hear of the concept of "leadership by example"?
hear of the concept of "equality of sacrifice"?
- Ever hear
of the real "golden rule"? The golden rules the execs live
by are two:
- He who has the gold makes the rules.
- He who makes the rules
gets the gold.
It's a vicious never-ending cycle of executive
greed and arrogance at the expense of the employees and the customers
of the company. BTW, I've done the math. Others have too. For some
of us, it's a substantial cut in the future accrual and a very disruptive
change which we have insufficient time to make adjustments.
on the Alliance@IBM Site:
- Alliance@IBM: Attention IBM employees:
IBM is blocking e-mail to and from the Alliance@IBM e-mail address email@example.com from
inside the company. Please send your job cut information and other correspondence from
your home e-mail. You can also contact us the following ways: Phone 607 658 9285 or Fax
607 658 9283.
On Our Side" Campaign Will
Hold Members of Congress Accountable for Their Votes. Excerpt:
The AFL-CIO has launched a "Who's On Our Side" campaign
to hold members of Congress accountable for the votes they cast
for or against the priorities of working families. "The mission
of the AFL-CIO is to fight for America's working families and that
means serving as a watchdog and holding politicians accountable
when they stand on the wrong side of workers," said AFL-CIO
Secretary-Treasurer Richard Trumka in announcing the campaign Dec.
13. "Working families - with the facts in hand - have the
power to take back the country and make sure we are represented
by leaders who are fighting for our best interests, and not the
special interests, every day."
- From the Job
Cuts Status & Comments page:
- Comment 1/03/06: As per the entry below about IBM letting
you go and then hearing about how they need your skills.
I was let go also and even if offered a job back with them,
starving and on the street I'd rather go take fork lift training
and get a job doing that than ever ever ever go back to IBM
no matter what they are offering. Now if the company that
outsourced us in the first place (Manulife Financial) were
to come calling then I would be there but sure as hell not
- From the General
Visitor's Comment page:
- Comment 1/01/06: Have you heard about ZeroChaos, IBM's new vendor
for hiring contract positions. Check out BlueDirect on IBM.com/employment.
As IBM sells out more full-time workers they will continue to replace
these jobs with contractors, some experts estimate the new IBM workforce
will include 25% contractors. Why doesn't IBM just transfer these
workers to IBM Supplemental or direct contract status vs. the current
humiliation of classifying IBM workers as redundant and then firing
them! Steve, Alliance Rep@Large for MA. -Steve-
- Comment 1/01/06: What IBM really market's is what it does to it's
own workforce. Comes up with immoral scams that cheat employees
out of their pensions they may have worked decades for.
IBM commits and sells mass age discrimination scams. IBM
Endicott and the EIT deal is a good example of one of IBM pension
ripoff scams as are IBM offshoring scams..internally and sold as
a service by IBM. -Anonymous-
- Comment 1/03/06: Let me see if I understand this "outsourcing
to other countries".We take away jobs from Americans who make
the money that can afford purchasing of the products and give it
to other countries who pay their people a very small salary, who
cannot purchase the product.They ship it back to America, who now
are unemployed and can no longer afford to purchase things. Sure
sounds like a plan to me. Hmmm!! I think I got it. -Anonymous-
- From the Pension
- Comments 01/05/06: Pension plan is being phased out effective
with 2008. Expect to see webcasts to give more information. Big
long glowing letter today telling how wonderful it will be. Little
chart at the end that I do not even understand. New name is 401(k)
plus. I wonder if any of the execs are getting less stock options
or other perks? Even the small pension was still better than nothing.
- Comments 01/06/06: Well now we know how IBM will react to losing
the Cooper Lawsuit. At best we gain a few bucks due to reverting
to old calculations but this kills any and all long term benefit.
God bless those that brought the suit because at least now we
all see IBM's hole cards. They will slash and burn to deny us
our paltry 20 grand a year pensions and medical benefits , cheat
the stockholders with paltry dividends, then shower executives
with bonuses and stock options for taking away from us little
guys. Come on fellow IBMers. Wise up and sign up. Live better,
work union. -Anonymous-
- Comments 01/06/06: Over 25 years with IBM and 50+ years old and
they pull this on us. Now, I will admit I haven't seen details
or taken this to anyone to figure out the effect but I am sure
IBM is the one gaining and I, along with many others, will be on
the losing end to this move. Everybody knows you make the biggest
gains in your pension between years 25 and 30. Ironically, this
is announced on the same day that my department was told that due
to market pressures our whole group would need to work extensive
OT for the unforeseen future. Keep taking away and asking for more
in return and there won't be anyone left to work the extensive
OT. What a slap in the face to the veterans of IBM!. -Anonymous-
- Comments 01/06/06: I have almost 26 years invested in this company.
This is the third time they are screwing us on this pension plan
- 1995, 1999 and now 2006. With the pension being frozen as of
YE2007, that most likely means the early retirement subsidy that
is kicked in at 30 years will be lost. I've done my calculations
on NetBenefits, and that bump is $495/month for me. You think that
7% adder to my 401k for 1 1/2 years would amount to a 495/month
annuity? Not even close. Thanks, IBM. What are the executives sacrificing
for the benefit of competitiveness? -Anonymous-
- Comments 01/06/06: What Bush wanted to do with Social Security,
IBM has effectively done to employee pensions. Now to even come
close to even the cash balance pension rate of return you have
to gamble your future retirement benefits with riskier investment
choices in this "new 401(k) plan. IBM future retirement is
now something you can't take to the bank but rather it has turned
into a walk in a casino... -Anonymous-
- Comments 01/06/06: I'm 51, almost 25 yrs service, my best years
of pension earnings are ahead of me, yrs 28, 29, 30. This broken
promise affects all of us that were hired on in early 80's. Is
this not age discrimination?? Why did they pull the plug now, could
they have done it so it would not affect all of us that are approaching
our later years. What a BROKEN promise and a screwing we got working
for this company all these years!!! -Anonymous-
- Comments 01/06/06: There is a special place in hell reserved
for the likes of J.R. MacDonald. Destroying the fabric and legacy
of a once great company that prided itself in its Basic Beliefs.
I guess the only belief that these mercenaries now hold is to wring
as much money out of a dying company as they can before its inevitable
- Comments 01/06/06: For many that were still under
the old pension plan (me being one of those employees),
that pension plan was the carrot that kept us from looking outside
of IBM for opportunities. With this latest move to save money,
(mark my words) IBM, over the next 5 years, will see a healthy
level of voluntary attrition of experienced and skilled professionals
(management included) since there really isn't much to stick around
for any more. By their own admission they are only looking to run
with the pack with regard to benefits and pay, and to that extent
they have certainly succeeded - IBM is no better or no worse than
others in the industry. It continues to boggle the mind that the
company's idea of financial security is back-dooring the profit
equation by continuing to hammer at employees and employee benefits.
When is this company going to sell its way to better financial
performance? There is something significantly lacking when we can't
seem to move the mark on aggressively growing the revenue piece
of the equation. There's a reason why the stock only hovers at
$80 something a share. Very disappointing to say the least. -Anonymous-
- Comments 01/06/06: IBM is now just a sweatshop. If management
is so focused on the short term, I wonder if they will mind if
I am too? -Anonymous-
- Comments 01/06/06: Pensions are simply deferred pay. They are
no surprise to managers, so it's entirely mendacious to claim otherwise
("cost pressures" and all that bull). Every department's
headcount overhead certainly fully accounted for pension costs,
you can be sure. This announcement is a pay cut, plain and simple.
Pensions work because a large group (employees) collectively can
spread market downturn risks much more effectively than individuals
can. Corporations have that size and risk pool advantage, and,
by sharing some of that advantage, they can attract and retain
talented employees (who want predictable, stable, secure pension
benefits -- not the "predictability" of contributing
something, hoping for the best, and hoping they don't live "too
long"). Now we have managers who haven't a clue that pensions
were one of the few distinguishing workplace characteristics that
allowed IBM to recruit and to keep talent -- the assurance that
every IBMer with at least some service could retire in dignity
instead of in cat food. Pensions took an IBM advantage (size) and
turned it into a talent recruitment advantage -- a win-win. These
changes will undoubtedly cause some of the most talented people
-- the ones snapped up by Google, Microsoft, etc. -- to leave,
further eroding IBM's revenue growth potential. IBM breaks its
(deferred) salary promise and slides into corporate mediocrity. "We're
just like HP, just like Dell, just like Sun." How sad. A union
would do a better job securing IBM's long term growth than IBM's
own managers. -Anonymous-
- Comments 01/06/06: When I hired on in IBM in the
late 1970's I was told part of my compensation was a pension. I
was NOT told it was a kind gift from IBM. I was presented with
a compensation PACKAGE that included pay, medical benefits, and
a pension. The pension being a deferred form of COMPENSATION. It's
mine. A promise made to be kept when I went to work for them. Now
27 years later I face one cut after another. In my opinion it equates
to THEFT pure and simple. If I was going to stay and work for IBM
I would join a union, but I don't want to work for IBM in any way
shape or form. I have had it. I'm going to work my way down to
zero as my work ethic has been destroyed. They can fire me and
I'll collect unemployment and start my own business as I will NEVER
work for a company ever again. I'll be my own boss. Drop dead IBM.