IBM Corp. announced that it will freeze the pension plans of some 120,000 U.S. employees at the end of next year and will offer what they say is a more generous 401(k) plan. The freeze means that benefits earned by current workers up to Jan. 1, 2008 will be preserved, but the benefits will not increase after that date. IBM's move is representative of many corporations that are abandoning their traditional pension plans. Last year, the company eliminated traditional pensions for new hires.
With these changes and those IBM expects to make this year for workers in other countries, the company says it hopes to cut worldwide retirement-related expenses by $450 million to $500 million in 2006 and by $2.5 billion to $3 billion through 2010.
