Pension ruling will affect top US corporates, warns IBM
The pension plans of top US corporates have taken a collective knock, according to IBM, after a federal court ruled that IBM violated age discrimination provisions after the company changed its pension plans during the 1990s. It is planning to appeal.
"IBM has a long history of providing pension benefits for its employees. We defended this lawsuit to preserve the current pension plan," says J. Randall MacDonald, IBM senior vice president of human resources. "This ruling affects not just IBM's pension plan, but the pension plans of more than 400 major US companies. This is a situation where a few have spoiled it for millions of US workers."
Two changes in the IBM pension plan led to the company offering concessions to older employees in 1999, but Judge Patrick Murphy ruled the concessions did not provide enough compensation. The last change, to a cash-balance plan, combined different features from varying pension plans. An IBM press release comments: "Under the court's interpretation of the law, every cash balance in the country is illegal. Scores of Fortune 500 have such plans."