IBM has announced plans to close its defined benefit pension scheme for existing members as part of efforts to make long-term retirement costs more predictable.
IBM, which has 5,000 members in its final salary scheme, has said its decision to close the scheme to future accrual will also help it maintain its competitiveness in the marketplace. The move follows similar announcements by other IT companies including Fujitsu in May.
Union Unite has accused global IT company IBM of using the cover of the recession to cut pensions for its UK workforce. Unite believes IBM can well afford to keep the existing scheme open but is seeking to cut costs in order to make more money available for dividends, to buy back IBM shares and for acquisitions.
Peter Skyte, Unite national officer, said: “The company, like others in the IT sector, is using the cover of the financial crisis to erode future pension benefits for long-serving and highly-skilled people.”
A statement issued by IBM said: “Taking action to maintain competitiveness in the marketplace and introduce greater predictability to long-term pension provision costs, IBM UK communicated to UK employees initiation of a consultation process regarding a package of pensions-related proposals. These proposals include enhancements to the defined contribution plan for all IBM UK employees, and closure of the defined benefit (DB) plans for existing DB members.”
IBM’s pension scheme closed to new joiners in 1997. The firm will conduct a 60-day consultation with employees on closing the scheme to future accrual.