IBM drastically changes its pension fund design

The company announced it would freeze its defined benefit plan and move towards defined contribution.

The reform will start in 2008; the company will freeze the current defined benefit scheme – considered too expensive – and encourage its employees towards participation in a redesigned 401k saving plan, based on individual accounts linked to the performance of financial markets.

Through this change IBM expects to save 3 billion dollars over the next four years.

IBM’s press release (05/01/2006)

IBM Adds Its Name to List Of Firms Freezing Pensions (The Washington Post, 06/01/2006)

IBM freezes pension scheme to save $3bn (Financial Times, 06/01/2006)