IBM alters pension terms
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September 17, 1999: 3:29 p.m. ET
Big Blue doubles number of employees eligible for old benefits plan
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NEW YORK (CNNfn) - In response to internal criticism over its pension-plan changes, IBM Friday said it is doubling the number of employees eligible to keep their existing benefits.
In a letter e-mailed to all IBM (IBM) U.S. employees, Tom Bouchard, senior vice president of human resources, said 65,000 employees will have the option of choosing between their existing plan and the company's new benefits.
In May, IBM announced plans to phase out its traditional pensions in favor of a more flexible retirement benefits package it said could save up to $200 million a year and was catered to the changing career goals of its workforce.
The new so-called "cash-balance" plan allowed employees to take accumulated benefits with them if they left the company. IBM allowed 30,000 IBM employees within five years of retiring to choose the new plan or keep the prior annuity scheme that delivered greater benefits late in an employee's career.
The pension plan changes met vocal resistance from mid-career employees, especially those between 40 and 50 years old, some of whom calculated that they potentially stood to loose tens of thousands of dollars in future benefits under the new program.
The additional 35,000 employees now eligible for the option must be at least 40 years old and have 10 years of service with IBM as of June 30, 1999.
IBM shares fell 2-5/8 to 127-3/8 in afternoon trade.
-- from staff and wire reports
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