Union criticises IBM's plans to stop final salary pensions

IBM is proposing to close its final salary pension scheme to current UK and Ireland staff.

The move would affect around a quarter of the company's...

IBM is proposing to close its final salary pension scheme to current UK and Ireland staff.

The move would affect around a quarter of the company's 20,000 UK workers.

Most of IBM's employees are already on a defined contribution pension plan. Under the proposals the rest of the company's staff would also move to defined contribution.

IBM closed the defined benefit, or final salary, pension plan to new members a few years ago.

The company says the move is to help the company "maintain competitiveness" in the tough economic climate.

Staff on final salary pensions are guaranteed a pension at the end of their career based earnings and length of service. Employees on a contribution scheme put money into an investment fund, which is used to buy a annual pension.

An IBM spokesperson said, "Taking action to maintain competitiveness in the marketplace and introduce greater predictability to long-term pension provision costs, IBM UK communicated to its 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 plans for existing members."

The Unite trade union says the company is using the recession as a "cover" to cut pensions. It said, "Unite believes that 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: "IBM is a highly profitable company with substantial revenues and cash reserves.

"This is a kick in the teeth to people in IBM who helped to rebuild the company when it was in difficulty. This announcement demonstrates that company loyalty is too often regarded as a one way street in the corporate world of 2009."

IBM is not the first IT company to cut back on its pensions - Fujitsu also recently announced its proposal to close its final salary scheme.




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