• Move affects 5,000 IBM staff still on defined benefit scheme
• It has totally thrown our futures into doubt, says one employee
Thousands of IBM workers in the UK face the closure of their final-salary pension scheme as the technology company becomes the latest to cut pension benefits.
UK staff were told last night that IBM planned to shut the defined benefit scheme to existing members, as it was no longer prepared to shoulder the financial burden. The scheme was closed to new members several years ago.
An IBM spokesman said the move would “maintain competitiveness in the marketplace and introduce greater predictability to long-term pension provision costs”. It has now started a consultation process.
IBM employs about 20,000 people in the UK, and 5,000 are still on the final-salary scheme. Under the proposals, this scheme will close in April 2010 and members will then have the option of joining IBM’s defined contribution scheme, under which they and the company would both pay a percentage of their salary into a fund whose final payout is uncertain.
The company, which posted better-than-expected profits in June, said it intended to enhance this defined contribution plan.
Staff learned of the plans in an email sent by IBM’s UK and Ireland general manager Brendon Riley yesterday afternoon.
According to technology news site The Register, the move has angered staff. “I’m fuming,” said one IBM employee. “It has totally thrown our futures into doubt.”
The consultation process will start on 5 August and run for 60 days. IBM is setting up a new body to allow workers to communicate their views to management, who say they will consider feedback before taking a final decision.
Theresa May, shadow work and pensions secretary, called the move another blow to pension provision in the UK.
“The reality is that this Labour government has repeatedly undermined pensions with tax raids and ever more red tape, leaving many companies feeling like they have little option but to shut down their final-salary schemes,” she said.
“Gordon Brown needs to face up to the damage he has done to pensions in the last 12 years and look at what he can do to stop the slow death of company pensions in the UK.”
Pensions experts have been warning for some time that final-salary schemes are becoming increasingly unsustainable, especially in the light of falling stockmarkets last year. Aon Consulting calculated last week that the top 200 defined benefit schemes were now £73bn in the red.
Last month, Barclays shut its final-salary scheme to existing members, while BP closed its scheme to new entrants. Surveys have shown that many other FTSE 100 companies expect to close their schemes in the next few years.
There are also fears that the BBC is facing a growing pensions deficit.
