IBM's Pension Plan

Paper Summary:

In this article, the writer looks at how the need to pay former employees' guaranteed pensions has significantly impacted certain automotive corporations' ability to grow, because so much of the money they are earning in the increasingly competitive automotive marketplace is being siphoned into paying promised benefits to retired workers. The writer also points out that IBM is a famous American corporation that has been forced to change some of its generous pension policies due to shifts in the economic climate. The writer discusses that IBM once offered a so-called traditional pensions plan, otherwise known as a defined-benefit plan. The writer then examines how IBM downgraded and adapted its pension plans.

From the Paper:

"The most recent downgrade applied to new employees and employees below a certain age, heralding a change likely to be typical of many IT company's policies in their future towards younger workers."
"IBM employees used to have a fixed guarantee of a defined pension upon retirement. Then, given increased shareholder pressures to cut company costs, two-thirds of IBM employees were forced to switch their pension plans from defined-benefit pensions, with guaranteed pension income to retirees, to defined-contribution pension plans. As their name suggests, defined-contribution plans means that an employee's retirement income is guaranteed only if the company paying the pension made a profit."

Sample of Sources Used:

• Ballard, Mark. (26 Jan 2006) "IBM Shatters the American Dream." The Registrar. Retrieved 17 Apr 2006 at http://www.theregister.co.uk/2006/01/06/ibm_downgrades_pension/
• Bruce, Laura. (17 Jan 2003) "How Healthy is Your Company's Pension Plan?" Bankrate.com. Retrieved 17 Apr 2006 at http://www.bankrate.com/brm/news/sav/20030317a1.asp
• Tumulty, Brian. (2006) "IBM Pensions: Special Report." pressconnects.com Retrieved 17 Apr 2006 athttp://www.pressconnects.com/special/ibmpensions/stories/story6097.shtml

More papers on IBM's Pension Plan:

• Analytical Essay # 89965 : "IBM New Benefits Analysis"
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• Persuasive Essay # 117973 : "Cash Balance Pension Plans"

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