IBM Corp. will begin offering new hires a 401 (k) plan instead of a pension
plan beginning next year, the Associated Press reports.
The news service notes that the company has been the target of employee lawsuits
over its conversion to a cash-balance pension plan in late 1990s. The company
is appealing a federal judge's ruling that the company's cash-balance plan discriminated
against older workers.
Older workers contend cash-balance plans discriminate against them because
when companies convert from traditional pension plans to cash-balance plans,
older workers often see a reduction in expected benefits.
At IBM, new hires will be able contribute 6 percent of their pay toward the
401 (k) and the company will match their contribution, the news service reports.
"IBM's new approach, which many companies have adopted, will allow IBM
to continue to provide a competitive retirement benefit to new hires in an uncertain
pension regulatory climate," says Kendra R. Collins, a company spokesperson.