WP: IBM Stops Offering Cash-Balance Pension

[DeepModem Mom]

IBM Stops Offering Cash-Balance Pension

By Albert B. Crenshaw
Washington Post Staff Writer
Thursday, December 9, 2004; Page E05


International Business Machines Corp., taken to court by workers over changes it made to its traditional pension plan, has decided to stop offering any such plan to new employees.

IBM will continue to defend its current "cash-balance" pension plan in court against charges that it violates federal age-discrimination laws, IBM senior vice president Randy MacDonald said in a telephone interview yesterday, but will offer workers hired after Jan. 1 only an enhanced 401(k) plan.

IBM becomes the latest employer to drop traditional "defined-benefit" pensions. Defined-benefit plans still cover more than 40 million workers, though the number of plans, which totaled more than 100,00 during the 1980s, has fallen sharply to about 30,000. The plans offer workers a benefit that is typically based on pay and years of service.

In recent years, more employers have shifted to "defined-contribution" plans, such as 401(k)s, to which they sometimes make a contribution but the worker does much of the funding and bears all of the investment risk....

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The Bush administration proposed regulations that would have deemed cash-balance plans not to be age-discriminatory, but critics on Capitol Hill, led by Rep. Bernard Sanders (I-Vt.), have blocked those rules....


http://www.washingtonpost.com/wp-dyn/articles/A49863-2004Dec8.html