Saturday, January 07, 2006

IBM is next major firm to drop defined benefit plans

Firms dropping defined benefit pension plans in favor of defined contribution plans is barely news, but I included this just because this article shows how much it expects to save which will make good class discussions. U.S.:
"International Business Machines Corp., the world's biggest computer company,
will cut its U.S. pension plans to help save as much as $3 billion in the next
four years.The changes will cost about $270 million in the fourth quarter,
Armonk, New York-based IBM said today in a statement. IBM said it will make up
for the cuts to defined benefits by boosting contributions to employee 401(k)
retirement plans beginning January 2008.IBM is among companies such as Verizon
Communications Inc. that are moving to reduce pension liabilities. IBM's pension
deficit, which was about $7.4 billion at the end of 2004, ranked fourth-highest
in the U.S. behind Ford Motor Co., Exxon Mobil Corp. and General Motors Corp."

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