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IBM Workers Gain Another Victory on Pensions
Alliance@IBM members and other workers at the company are a step closer to regaining the pension benefits they had earned before IBM unilaterally cashed in their pensions and substituted a cash balance plan.
In August 2003, a federal district court judge for southern Illinois ruled that IBM discriminated against older employees twice in the 1990s, first, when the company made changes to its traditional pension plan in 1995 and second, when it completely converted those pensions to a cash balance plan in 1999.
As Judge G. Patrick Murphy indicated that he was prepared to rule on the amount IBM owed current and former employees, the company reached a settlement addressing part of the class action lawsuit. The $320 million settlement IBM agreed to covers those employees affected by the 1995 changes to the pension plan and employees who did not work long enough to receive a pension. About 130,000 workers were affected by the company's actions.
The federal judge's decision that the cash balance plan illegally discriminates against older workers is being appealed by IBM. If that decision is upheld, workers will be entitled to the pensions they earned before IBM unilaterally converted to a cash balance system. Under the settlement, IBM's liability for this phase will be limited to about $1.4 billion.
Lee Conrad, CWA staff representative for Alliance@IBM, CWA Local 1701 and a former IBM employee, said the court's decision - and settlement - was a big step toward the justice and fairness IBM workers had been fighting for since 1999.
"When IBM made that change in 1999, workers began mobilizing and saw what their collective action could accomplish: extensive public and media attention, congressional hearings on Capitol Hill and IBM's being forced to roll back some of the changes that especially hurt workers near retirement age," he said.
When companies convert a traditional pension to a cash balance account, long time workers can lose half or more of the value of their pensions, as happened to long time IBM workers in 1999. Since the judge's ruling last year, companies have stopped converting traditional pensions to cash balance plans, awaiting court action.
In August 2003, a federal district court judge for southern Illinois ruled that IBM discriminated against older employees twice in the 1990s, first, when the company made changes to its traditional pension plan in 1995 and second, when it completely converted those pensions to a cash balance plan in 1999.
As Judge G. Patrick Murphy indicated that he was prepared to rule on the amount IBM owed current and former employees, the company reached a settlement addressing part of the class action lawsuit. The $320 million settlement IBM agreed to covers those employees affected by the 1995 changes to the pension plan and employees who did not work long enough to receive a pension. About 130,000 workers were affected by the company's actions.
The federal judge's decision that the cash balance plan illegally discriminates against older workers is being appealed by IBM. If that decision is upheld, workers will be entitled to the pensions they earned before IBM unilaterally converted to a cash balance system. Under the settlement, IBM's liability for this phase will be limited to about $1.4 billion.
Lee Conrad, CWA staff representative for Alliance@IBM, CWA Local 1701 and a former IBM employee, said the court's decision - and settlement - was a big step toward the justice and fairness IBM workers had been fighting for since 1999.
"When IBM made that change in 1999, workers began mobilizing and saw what their collective action could accomplish: extensive public and media attention, congressional hearings on Capitol Hill and IBM's being forced to roll back some of the changes that especially hurt workers near retirement age," he said.
When companies convert a traditional pension to a cash balance account, long time workers can lose half or more of the value of their pensions, as happened to long time IBM workers in 1999. Since the judge's ruling last year, companies have stopped converting traditional pensions to cash balance plans, awaiting court action.