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To: RealMuLan who wrote (18244)	12/9/2004 8:27:09 PM
From: RealMuLan	Respond to of 116555

IBM Halts Pension Plan for New Hires Thu Dec 9, 2004 05:33 PM ET By Eric Auchard SAN FRANCISCO (Reuters) - IBM (IBM.N: Quote, Profile, Research) will offer future employees a 401(k) pension plan instead of a fixed pension, the company said on Thursday, backing away from a controversial policy that reduced retirement payouts and stirred employee ire. The 401(k), also known as a defined-contribution benefits plan, would encourage new employees to contribute up to 6 percent of annual earnings to a tax-free savings plan, with the company matching up to another 6 percent, or 12 percent in total, a spokeswoman said. The new plan, which applies to U.S. employees hired on January 1, 2005 or after, was announced internally within IBM earlier this month, spokeswoman Kendra Collins said. Employees stand to receive the cash immediately, with no vesting period. The plan was first reported in the Wall Street Journal on Thursday. Changes to IBM's pension policies five years ago have made the company a symbol of the dilemmas U.S. companies face in seeking to adjust their polices to take into account aging workforces and rising healthcare costs. One critic of IBM's pension policies, Janet Yueger, a 23-year IBM employee who resigned in 1999 to protest pension changes at the time, said the new plan goes a long way to addressing the drawbacks of the cash balance scheme. "I think new employees are getting a better deal," said Yueger, a former computer programmer in Rochester, Minnesota, home to IBM's mid-range computer systems line. Yueger played a leading role in an age-discrimination suit against IBM over the existing, so-called "cash balance" plan. This fixed-contribution plan remains in effect for one-third of IBM's U.S. employees. Roughly 45 percent of IBM workers live in the United States. Overseas workers are covered by a mix of other pension-schemes. A cash balance plan combines aspects of traditional defined benefit plans -- which pay fixed benefits for life -- and defined contribution plans. The cash balance approach was adopted by hundreds of U.S. companies during the 1990s who were looking to address the issue of spiraling pension costs. Under the new plan, IBM agrees to double whatever amount the employee contributes, up to another 6 percent of salary, or 12 percent in total -- putting IBM at the high end of corporate contributions, according to benefits experts. Continued ... reuters.com