IBM is considering freezing the company’s U.K. defined-benefit plan by April 2010, according to an e-mail the company sent to employees.
The plan has been closed to new members since 1997.
IBM UK, based in Portsmouth, England, had £5.3 billion ($8.4 billion) in pension assets, according to the 2008 Pension Funds and Their Advisers reference guide.
IBM UK employees now enrolled in the DB plan will go through a 60-day consultation period beginning in August to switch to an enhanced defined-contribution plan. DB benefits already accrued are not affected.
“The rapidly rising costs and liabilities associated with the provision of defined benefit pensions is placing pressure on long-term ability to invest for future growth and operate in an intensely competitive global market,” according to the e-mail.
Under the current U.K. defined-contribution plan, IBM matches 8 percent of an employee’s salary when the employee contributes 3 percent of salary. The enhanced plan would increase IBM’s contribution to 10 percent, depending on the percentage of salary employees contribute themselves.
“Taking action to maintain competitiveness in the marketplace and introduce greater predictability to long-term pension provision costs, IBM U.K. communicated to its employees initiation of a consultation process regarding a package of pensions-related proposals,” according to an e-mail from an IBM spokesman in response to questions. “These proposals include enhancements to the defined contribution plan for all IBM UK employees, and closure of the defined benefit plans for existing members.”
Filed by Thao Hua of Pensions & Investments, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.
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