The news comes just one month after IBM sealed a deal with New York to retain more than 1,000 semiconductor jobs in East Fishkill — the very jobs that will now see pay cuts. “It is unacceptable that IBM slashes the pay of employees while IBM posts record profits and gives the executives double-digit pay raises,” said Lee Conrad, national coordinator of Alliance@IBM. “IBM is able to do this because there is no union contract with employees that would negotiate such a drastic move as a pay cut.” As part of its deal with New York, IBM agreed to job retention goals that were not tied to salaries. It also said it would provide “significant resources” to upgrade the site with state-of-the-art technology.
"We are making this change to improve our competitiveness and to ensure our pay practices and cost structure are competitive with other companies in our industry," an IBM spokesman told the Times Herald-Record.
News of the revamped pay structure was not received well by Alliance@IBM worker representatives, who pointed to IBM's stunning second quarter results issued last month.
"It is unacceptable that IBM slashes the pay of employees while IBM posts record profits and gives the executives double-digit pay raises," Lee Conrad, national coordinator of Alliance@IBM, told the paper. "IBM is able to do this because there is no union contract with employees that would negotiate such a drastic move as a pay cut."
The practice has drawn scant notice. A close examination by The Wall Street Journal shows how it works and reveals that the maneuver, besides being a dubious use of tax law, risks harming regular workers. It can drain assets from pension plans and make them more likely to fail. Now, with the current bear market in stocks weakening many pension plans, this practice could put more in jeopardy. ...
The background: Federal law encourages employers to offer pensions by giving companies a tax deduction when they contribute cash to a pension plan, and by letting the money in the plan grow tax free. Executives, like anyone else, can participate in these plans.
But their benefits can't be disproportionately large. IRS rules say pension plans must not "discriminate in favor of highly compensated employees." If a company wants to give its executives larger pensions -- as most do -- it must provide "supplemental" executive pensions, which don't carry any tax advantages.
The trick is to find a way to move some of the obligations for supplemental pensions into the plan that qualifies for tax breaks. Benefits consultants market sophisticated techniques to help companies do just that, without running afoul of IRS rules against favoring the highly paid. ...
The result, though, is that a majority of the tax-advantaged assets in Intel's pension plan are dedicated not to providing pensions for the rank and file but to paying deferred compensation of the company's most highly paid employees, roughly 4% of the work force. ...
And taxpayers are on the hook in other ways. When deferred executive salaries and bonuses are part of a pension plan, they can be rolled over into an Individual Retirement Account -- another tax-advantaged vehicle. Intel believes that its practices "feel consistent" with both the spirit and letter of the law that gives tax benefits for providing pensions. Intel may be a model for what's to come. Many companies are phasing out their pension plans, typically by "freezing" them, i.e., ending workers' buildup of new benefits. This leaves more pension assets available to cover executives' compensation and supplemental benefits. A number of companies have shifted executive benefits into frozen pension plans. ...
So how can companies boost regular pension benefits for select executives while still passing the IRS's nondiscrimination tests? Benefits consultants help them figure out how. To prove they don't discriminate, companies are supposed to compare what low-paid and high-paid employees receive from the pension plan. They don't have to compare actual individuals; they can compare ratios of the benefits received by groups of highly paid vs. groups of lower-paid employees. Such a measure creates the potential for gerrymandering -- carefully moving employees about, in various theoretical groupings, to achieve a desired outcome.
Another technique: Count Social Security as part of the pension. This effectively raises low-paid employees' overall retirement benefits by a greater percentage than it raises those of the highly paid -- enabling companies to then increase the pensions of higher-paid people ...
Generally, only the executives are aware this is being done. Benefits consultants have advised companies to keep quiet to avoid an employee backlash. In material prepared for employers, Robert Schmidt, a consulting actuary with Milliman Inc., said that to "minimize this problem" of employee relations, companies should draw up a memo describing the transfer of supplemental executive benefits to the pension plan and give it "only to employees who are eligible." ...
Companies don't explicitly tell the IRS that an amendment is intended to shift supplements executive benefits obligations into the regular pension plan. "They hide it," a Treasury official said. "They include the amendment with other amendments, and don't make it obvious." With too little staffing to check the dozens of pages of actuaries' calculations, the IRS generally accepts the companies' assurances that their pension plans pass the discrimination tests, the official said. ...
Sometimes, the only tip off that a firm is moving executive benefits into the regular pension is that it provides small increases to some lower-paid groups in the plan, in order to pass the nondiscrimination tests. If link is broken, view Adobe Acrobat version (PDF).
As employees began to retire, most balances were pitifully small. So on July 1, after a vote authorized by the state legislature, 14,871 school employees, or 78%, switched to the old-fashioned pension plan. After the vote, teachers were "jumping up and down and crying in the halls," Ms. Hale says. ...
Around the country, a few big employers have ditched retirement-savings plans and returned to traditional pensions. The pace of big companies abandoning pension plans appears to be slowing as well. In 2007, 54 of the 100 largest U.S. employers offered an old-fashioned pension plan to new workers, down from 58 in 2006, according to Watson Wyatt Worldwide, a management-consulting firm in Arlington, Va. That 7% decline compares with a 14% drop as recently as 2005. ...
But studies are starting to document that traditional pension plans, which typically are overseen by professional money managers, outperform programs in which workers control an investment account, like 401(k)s. Between 1995 and 2006, "defined benefit" pension plans, so-named because they give retirees a specified monthly benefit, outperformed defined-contribution plans, in which the employer makes a specified contribution to the worker's account, by about one percentage point a year, for a cumulative dollar difference of nearly 14%, according to a June report by Watson Wyatt. ...
The United Methodist Church last year moved its 36,000 clergy and lay employees back to a traditional pension, realizing that "with ministers, really their talents are in creative areas, and often not in investment areas," says Ron Gebhardtsbauer, an actuary in University Park, Pa., and a former trustee with the church's pension board. Barbara Boigegrain, general secretary of the church's Evanston, Ill.-based pension board, adds that the church didn't believe it was fair that its employees "were at the whim of the markets." Those who retired in the bull market of 1999, for instance, generally had a better nest egg than those who retired as a three-year bear market ended in 2002. "We care desperately that they have an adequate income in retirement -- and income that they cannot outlive," she says. ...
Teachers returning to the pension plan will receive reduced benefits to reflect that they've contributed less than other state workers over the years. But they will have the option to make catch-up contributions to "buy back" the full benefits. Ms. Elmore, 46, says she realized her disappointment in the defined-contribution plan when she received a letter from the state's retirement board in April projecting that, at age 60, she would have a big-enough nest egg to provide her with $1,571 per month for her life. By contrast, the letter projected, if she voted to go back to the defined-benefit plan, she would receive a projected monthly payment between $2,656 and as much as $3,050. "I jumped on it," she says. "I was just worried."
Today, Freddie Mac and the nation’s other major mortgage finance company, Fannie Mae, are in such perilous condition that the federal government has readied a taxpayer-financed bailout that could cost billions. Though the current housing crisis would have undoubtedly caused problems at both companies, Freddie Mac insiders say Mr. Syron heightened those perils by ignoring repeated recommendations. ...
Mr. Mudd was promoted to chief executive of Fannie Mae the following year, after that company was also accused of accounting errors totaling $6.3 billion. His compensation has totaled more than $42 million. ...
“The thinking was that if something really bad happened to the housing market, then the government would need Freddie and Fannie more than ever, and would have to rescue them,” Mr. Andrukonis said. “Everybody understood that at some level the company was putting taxpayers at risk.”
The article quotes a consultant on how hard it is to find COBOL programmers; he says you usually have to draw them out of retirement. Problem is, if there were any such folks on the employment rolls in California, Gov. Schwarzenegger fired them all last week, too.
Salaried employees who have been briefed said GM appears to be planning to offer full pension payments and six months of separation pay to workers 58 and older with at least 10 years of service. Typically, workers must reach age 62 to qualify for 100% of their pensions. Those same employees said their managers expect workers aged 55 to 57 to be offered enhanced pensions and six months of separation pay. Some salaried employees who already have reached retirement age are expected to be encouraged to take their pensions and six months of separation pay.
Wal-Mart's treatment of its employees is so egregious that many countries, including China, would not let Wal-Mart do business within their borders unless the company permitted its in-country labor force to be unionized.
Slaves on the Chinese side making the stuff and slaves on the US side stocking the shelves and running the cash registers. The perfect New World Order enterprise. It's reported that when Sam Walton founder of the company died, his good friend, George H.W. Bush, the president's father, openly wept. I believe it.
To top it all off, I enjoy the work I am doing a lot more in my new job. And I don't have to look over my shoulder for the next IBM layoff.
If you haven't reached retirement eligibility yet, it may be worth waiting to hit that milestone before leaving IBM in order to get the higher pension benefit.
One decision I had to make was whether to start collecting my pension right away, or wait until I stop working and really retire. I found that my pension would increase by only around 2% for each year I waited. I decided I would be better off starting to collect immediately. 2% per year puts the break even point too far out to make it worth waiting.
As for retiring and not taking on another yoke/collar or whatever from another poster. Until I'm pleasantly wealthy that isn't an option. If I had kicked my kids out early and were not supporting multiple generations of family I might be able to do that. Since I'm not I'll end up changing one yoke for another. Being so young (relatively speaking) I could work for another 10 years with someone else and continue to build my 401K savings and develop my skills in something other than computers as I am pretty tired of them now.
My first preference would be to simply get out of technology all together but I have not found a job that will pay as well as IBM outside the field of technology that I can develop skills inside of the next two years. I could win the lottery, find a suitcase full of drug money, be in the right place at the right time and have some rich person give me money.
I could also move to a country (not my first choice) where the standard of living is very much lower than the US and live off my 401K and Pension pretty decently. Could learn the language, offer myself as an english teacher and supplement my income. Places like Guatemala, Indonesia, China and such my existing supply of money would stretch a long way. Medical care would be a bit complicated but one could always fly to the US, drop in on a hospital as indigent, they have to care for you and then fly back out. Sorry some of these ideas are silly, some are half baked, but they are ideas, outside of the box and potential options.
Hey, Enjoy! I was more than happy to contribute what might have been my COLAs to your desperately needed SERP. Any pension over 15 hundred a month for 37 plus years is wasted on booze and broads anyway. Oh, and thanks for the $0.99 (it could have been less) that my once free health plan contributed to my late spouses last 15 hours of hospital bills which was a piddling $61K.
People like you are truly an inspiration to we grunts. BTW, I, too have managed without a job since retiring in 89 and we also managed to save a goodly portion of our combined pension and SS. Thus I volunteered in a worthy cause as well and even paid my own expenses for uniforms, travel costs, etc. Only gas for the boat (not mine) and meals for the crew and myself were ever reimbursed.
Yep! With a good attitude life CAN be pleasant. But somehow I seem to feel that integrity and respect from IBM would have definitely added to my joy. But IBM got Gerstnerized, which is now a national pastime for other CEOs, and, thus, my fellow IBMers who had hoped to be as lucky as both you and I are now, on the average, up sh*t creek.
Would you please join me in supplying a crying towel or two for those whiners?
I went into public sector as a CIO and have done very well since. I got even with IBM when I booted IGS out of my jurisdiction and brought in boutique shops which have really improved things. Then I replaced all my IBM equipment with HP and Apple. I got even to the tune of 47 million dollars lost revenue for IBM and got kudos for making the IT operation run faster, smoother and cheaper than ever before.
Our friend who works as a board member for a large number of non-profits may notice if he's working in one of the largest international non-profits that has a lot of red in its logo that all IT is now moving away from IBM to HP. It was a glorious decision for me as their IT advisor!
I donate time doing some teaching of business at my local community college and love it when I can have the opportunity to show young people the way to a successful career by avoiding IBM as a place of work and opportunity. By using IBM as the case for bad executive talent and exploitation, I show many how to look past the corporate propaganda in search of the truth. It's really gratifying to hear your students come to me and telling me that they've decided to forgo IBM as a place for opportunity and work.
My blood pressure came down 22 points the day I left the blue pig and it's been wonderful ever since. I am enjoying my retirement by giving back love and appreciation to my community, my family and screwing the blue pig in every way I can on behalf of my poor colleagues who never had a chance to make it at the pig.
I just retired at 55 and got to choose both my QCC gift and my retirement gift at the same time. The QCC gifts are really pretty decent, and can be bought on Amazon for around $900. I chose a 32" Sharp Aquos HD LCDTV, and had lots of other cool choices in jewelry, house wares and electronics.
However, the retirement gifts were pretty chintzy -- and I was so underwhelmed with the first gift I chose that I sent it back and chose a different one. All the gifts can be bought on Amazon for $200 or less, and I had a hard time finding anything I even wanted. (The jewelry choices include tiny little freshwater pearl necklaces or rings set in birthstone gems like garnets and blue quartz, and department store watches. House ware items are things like small Waterford lamps and beverage sets.)
But the thing that nearly killed my father when I told him was that my retirement letter from Sam P misspelled my first name. He said both of the Watsons must be spinning like tops in their graves!
In preparation for that moment, the world's biggest big investment banks, insurers, hedge funds, and private equity shops have been quietly laying the groundwork for such deals over the past year. They would be a big prize for Wall Street. The $2.3 trillion pension honey pot has $500 billion in "frozen plans" that are closed to new employees and whose benefits are capped, including those at IBM, Hewlett Packard, Verizon, and Alcoa.. And that figure could triple by 2012, according to consulting firm McKinsey. By managing those troubled plans, Wall Street also gains entrée to an appealing set of customers to whom it can sell a broad array of fee-generating products. "We have identified several clients who would be willing to be first to sell a plan," says Scott Macey, a senior vice-president at Aon Consulting. "But the question is, when is a good time for this?" ...
But the gambit to turn pensions into for-profit enterprises raises troubling questions. Critics, including some on Capitol Hill, worry that financial firms don't have workers' best interest at heart, which would put some 44 million current and future retirees at risk. "We think it's just a terrible idea," says Karen Friedman, policy director for advocacy group Pensions Rights Center. "In the wake of the subprime crisis, it would be crazy to allow financial institutions to manage these plans." ...
Wall Street's Dumping Ground Historically, pension funds have been managed conservatively, in keeping with the broad goals of long-term wealth accumulation. Alternative investments such as hedge funds, derivatives, and asset-backed securities represent less than 25% of pension assets. If financial firms get involved, exotic investments could swell to 50% of pensions assets by 2012, predicts McKinsey. The biggest fear is that Wall Street could use retirement portfolios as a dumping ground for its most toxic and troublesome investments. It's not unlike what regulators allege UBS officials did with its stockpile of risky auction-rate securities by trying to off-load them to wealthy clients.
If Wall Street gambles with those pension assets and loses, U.S. taxpayers would probably foot the bill. When a company with a pension goes belly up today, the PBGC, under federal law, has to take on the fund's obligations and dole out money to its beneficiaries. It's a costly burden: The PBGC currently runs a $14.1 billion deficit.
As usual, Wall Street's plan to buy these frozen pensions will line its own pockets and it will help companies as well. For example, if Wall Street charged a 2% management fee, that alone would generate $30 billion in revenues by 2013 if it bought all the frozen plans, but that fee income is probably the tip of the iceberg. ...
The nice thing about keeping a pension plan under the control of the company that employs you is that it needs its workers to continue functioning. So it has an incentive to preserve their pensions. But that's no longer true once the pension plan is in the hands of Wall Street. If you like this plan of putting your pension at risk while further engorging the profits of Wall Street and corporations, you can have it by electing John McCain. BusinessWeek reports that a former senior advisor to McCain and former Pension Benefit Guarantee Corp. (PBGC) Chairman, Bradley Belt, is a big supporter of this plan.
The IT industry body Nasscom will soon unveil a report along with the Indian Institute of Management Ahmedabad (IIMA) to improve gender diversity. “The report is part of our efforts to encourage women to take up IT/ITeS career. These measures will also help the industry expand the talent-pool base,” Nasscom president Som Mittal said. ...
“Only 16% women enrol for engineering as a lot of girl students shy away from maths and science. They may find the male-dominated IT industry tough to break into. The long work hours often expected in the booming high-tech industry are difficult to balance with family responsibilities. Thus many of them keep away from taking up technical careers. We have taken efforts to improve the scenario,” said Ms Margabandhu. At present, IBM has over 53,000 employees, of which 26% are women. To create interest among women students to pursue a broad range of careers in research, business and technology, IBM conducted an exclusive technology day for women in Hyderabad recently.
The study, the first detailed look at the health of the uninsured, estimates that about one of every three working-age adults without insurance in the United States has received a diagnosis of a chronic illness. Many of these people are forgoing doctors’ visits or relying on emergency rooms for their medical care, the study said. ...
The study’s authors say that their findings cast doubt on the common assumption that many of the uninsured tend to be young and healthy, requiring little in the way of medical care. Because so many actually have chronic conditions that may be expensive to treat, the cost of covering the uninsured is often underestimated, said Dr. Woolhandler, who advocates a nationalized system of health care.
Medicare today covers about 43 million American seniors and the disabled, paying about one-half of their health care expenses. Amidst an increasingly unaffordable health care market, Medicare recipients have a solid rock of coverage. The program is administered with an overhead of about 3 percent, less than one-fifth the overhead of competing private programs, while offering defined benefits with free choice of physician and hospital.
A survey by the Commonwealth Fund in 2002 found that Medicare beneficiaries rate the program much higher than private health insurance in terms of quality, help with access to care and payment of their medical bills. A binding social contract has been established and kept with eligible beneficiaries that they can trust and depend on. Even at that, seniors are paying much more out of pocket now than they were in 1965 for health care – 22 percent of their annual income.
Despite its many successes, Medicare has been under relentless attack by conservatives, market stakeholders and their lobbyists pushing to "save" Medicare by killing it. Their agenda is to siphon off more affluent seniors to private plans and shrink Medicare to a much smaller program. There is no ambiguity in this goal. As then Speaker of the House Newt Gingrich said at the time, this kind of "reform" could "solve the Medicare problem" and cause the program to "wither on the vine."
How can you do financial planning not knowing what your raise will be, or your performance bonus, or if your pay will be cut with a reclassification. How can you go into a long term debt like a mortgage not knowing if you will get a new boss who dislikes you in a few years who will trump up a case to surplus you and you have no where to turn for help defending yourself. A union contract will not only define raises, pensions,benefits but also how layoffs will be administered, how seniority will be defined, How training will be allocated, how performance measurements will be administered. How can this leveling of the playing field be detrimental to employees? In many unions training becomes the union's problem. Unions run schools for members in most trades. The companies define the skills they want and need. The union trains its members to fill those needs.
Sounds like a win win scenario to me as cost of training is one of the things IBM whines about. As the few folks left, who are hanging on just to get to their frozen pensions leave; the rest better look long and hard at what the future holds for your own retirements and lifestyles. A union really is the only sane answer. You cannot spend potential earnings. You cannot save potential earnings. You cannot budget with inflation running rampant and no cost of living raises. Its survival time. Join the Union. -Exodus2007-
Alliance reply: Thank you, Exodus2007, for saying what we have been saying from the beginning. The only additional point that we continue to make is that joining the union is the first step. Organizing co-workers and taking the time to talk with them about what they can expect from a union contract versus what IBM tries to scare them into thinking, is the next step. Organizing is the best weapon against the vitriolic venom that is released, like a deluge, on IBM employees every time the subject comes up. It's called union busting; and it will rear its ugly face to IBM employees, sooner or later. Organizing helps to inoculate employees against the company's tactics...and IBM has more than a bag full... You can be sure of that. Thank you for continuing to help Alliance@IBM get the word out; and continuing to organize outside of the company. Your help is greatly appreciated.
For example....you submit a request for 4 hours of overtime to apply some security patches. Someone has a sev 1 that requires them to work an extra 4 hours, so your 4 hours of overtime is eliminated. Managers have to juggle this day to day, making decisions about who gets overtime and how much. My manager explained to us that if they don't meet their requirements, an RCA is opened and they have to answer to senior management about why. BFD. Like I give damn that he has to answer to senior management.
This applies even if you're on call. If you\'re on call and get paged on Saturday or Sunday then it\'s expected that you will now work 8 hours that day(s) to officially make it a work day, and you'll take days off during the week. Which means, of course, that when you're on call, you can't plan anything since you have no idea what days off you'll have. I'm on call EVERY OTHER WEEK!!! So week to week I'll have no idea what days off I might have. Want to go to that barbecue Saturday? Nah, forget it....you got paged at 6am, so now your ass is working until 2pm.
They weaseled around the standby pay because the law says you have to pay standby pay if employees are required to respond to a call within one hour. IBM says that there are "no financial penalties" to IBM if we don't respond within an hour, so therefore, we aren't officially REQUIRED to respond within that hour. The contract I work on states that response time is 15 minutes for all severities. Calling the help desk and opening the ticket constitutes "response within 15 minutes", so that's how they get around that, the bastards. However, we're still expected to meet the SLA's (4 hours resolution for sev 1, for instance). I didn't know I had it in me to be this angry. I'm interested to know if/when others get this news. -Disgusted beyond belief-
I used to scoff at some of the union rules like that but as IBM became employee vicious it suddenly seemed a pretty damn good idea. It would amaze you the depth of things like this a union can define in a contract for YOUR protection and benefit. A union contract can specify say 50 dollars per month for every year of service, Doesn't sound like much but 30 years would give you 18000 per year pension. not a fortune but nice to have. Things like this we have allowed to slip past us somehow waiting for the CEO in shining armor to come to our rescue and restore our past benefits.
Folks it just is not going to happen. We have to be our own hero's and stand up for ourselves. No one who supports unionizing is looking to bankrupt the company. We are just looking to be treated fairly in salary, benefits, retirements and work hours. At what point in America did indentured servitude come back into style? When IBM bullies you and tells you're lucky you have a job, they are basically saying they OWN you. Vote for freedom today. Join the CWA. -Exodus2007-
I worked with the HR Tech. Lead in Burlington and she wanted me to file an appeal because she totally disagreed with my mgr. and the other HR person. At that point I didn't want to lose my measly 13 weeks sev. so I found another job paying 40% less. I called my old mgr. in IN who now has about 40 years of service and he convinced me to contact HR in Armonk the day I left before 5. I worked with a women there for about 3 months and I sent her over 10 pages of documentation on my mgr. and even told her I talked with the person who said they were getting hired and they still sided with her. I talked to a lawyer and he said I had a case but then again you know the IBM rule - you go to a lawyer you lose your severance. I am ok with it all now. I feel very bad every time I read another article in the newspaper or see something on the news about how IBM is totally screwing the employees in Burlington. My advice to anyone there who has there 30 years and can retire is to hit the door running and don't look back. You can always get a part time job if you are bored. My mgmt. at the hospital is absolutely wonderful and I wouldn't take a job back if they offered me more money. -ex-ibmer-
Vault's IBM Business Consulting Services message board is a popular hangout for IBM BCS employees, including many employees acquired from PwC. Some sample posts follow:
To drive these results, we have been executing a strategy that aligns investments to growth opportunities. In the emerging markets we've been investing to capture the opportunity created from the build-out of the infrastructures in these high growth economies. While in the more established markets, we're managing our business for productivity, and we're delivering solutions that provide value to our clients.
If you don't understand CFO-speak, I can translate:
Reading this, if I want a fast-paced career, I go to the emerging markets and stay away from the "more established markets." - that assumes I want to go global for a growth career. Other option is go to a growing company/market/industry in the geography I want to be in. Pretty much what ABC has been saying - the boutique firms are the growing market in US.
As a stockholder I'm fine with this. IBM has told us what they're going to do, why they're doing it, and given targets through 2010 for the results they expect. As an employee, staying in the US at IBM and hoping I'll find a fast-paced, growing career is a little delusional.
This site is designed to allow IBM Employees to communicate and share methods of protecting their rights through the establishment of an IBM Employees Labor Union. Section 8(a)(1) of the National Labor Relations Act states it is a violation for Employers to spy on union gatherings, or pretend to spy. For the purpose of the National Labor Relations Act, notice is given that this site and all of its content, messages, communications, or other content is considered to be a union gathering.