Most of the time God,Pratt & Whitney or General Electric, will give you another turn in the Barrel.

These are my opinions and my opinions only they do not reflect the opinions of any of my family members or their employer. Note we NOW have NO employers.

Back from a 5.5 Year PCS from the confines of the far Southwest corner of Bundesrepublik Deutschland. The Federal Republic of Germany and Retired.

Friday, December 7, 2012

One more step toward the fungibility of the Employee

International Business Machine, AKA IBM, AKA Big Blue, just announce another step in their program to overhaul their pension program.  Here is the link.  Many years ago they converted from a defined benefit plan to a defined contribution plan.  New employee had no choice it was the defined contribution plan for them.  Retired employees and some soon to retire were allowed to stay in the defined benefit plan.  The rest of IBM employees were converted to the defined contribution plan from the defined benefit.  The amount of each employee defined benefit was calculated buy a disinterested third party hired by IBM (believe that and I will make you a great deal on some sea side property in Kansas) and an appropriate amount (given the growth assumptions) was placed in to the defined contribution plan for each employee.
The defined contribution plan was not that bad, IBM did have a matching contribution to the plan.  That contribution was made at the end of every pay period.  But gosh that is a great deal of money to tie up in an accounts that IBM cannot use, it is all those pesky fiduciary rules and regulations created to conform to ERISA of 1974.
So now IBM has decided that rather than make their matching contribution at the time that the employee makes his contribution, they will hold their contribution back until the end of the year, and make one lump sum yearly contribution.  That way IBM can still use the funds for their own needs.  IBM makes a defined benefit contribution of between 6 and 10 percent for each employee depending on the employee contribution.
With 95,000 employees in the United States, and an average salary in the 80K$ dollar range we are looking at some serious money in the range of 456 Million Dollars.  That is some serious change that the corporation could be using rather than have it tied up in employee retirement accounts.  If the employee turn over rate is near 5 percent, well that nearly 23 Million Dollars that the corporation gets to keep, it is truly good to be the king.
IBM is just recording IOUs for their contribution to each employee and they are put into an account and if the employee is still with company come the time that the lump sum is paid they get it.  The bad news for the employee is that they must still be employed by IBM when the lump sum is paid, otherwise no joy.  IBM is being a true sport to those employees who retire before the date that the lump sum is paid, they will still get IBM contribution, but they are not doing that out of the kindness of their heart, that is the law.
In the spring of this year IBM announce a plan for selected individuals, those close to retirement by the end of 31 December 2013 the option of working 60 percent of their schedule, being paid 70 percent of their rate, but with full benefits with a guarantee of their employment until their retirement date or 31 December 2013 which ever came first.
Given that IBM was “rebalancing its workforce” an IBM spokesman characterized this program as being “rather unique”.  If an employee did not join this program well then they would certainly be subject to resource actions, since according to the same IBM spokesman “IBM will continue to rebalance its skills and resources based on customer needs”.  Which was a nice way of saying you will be leaving sooner rather than later.
Another whack job by those lovable bastards that are drawing the big bucks enjoy, and making the hard decisions.

No comments:

Post a Comment