IBM 401(k) changes rankle workers' group

Dec. 07, 2012 @ 06:48 PM

DURHAM – New York-based IBM Corp. is changing the timing of when it makes contributions to employees’ 401(k) plans in a move that’s drawn criticism from the coordinator of an advocacy organization for company employees.

Instead of making contributions semimonthly, IBM is planning to make an annual contribution on the last business day of the year to employees’ 401(k) plans. The worker must be employed on Dec. 15 of each year to receive that year’s contribution.

The percentage of IBM’s match or contribution isn’t changing, according to an email from IBM’s senior vice president for human resources about the change. The email was posted on the website of Alliance@IBM CWA Local 1701, an employee advocacy organization that wants union bargaining rights with IBM.

The change will go into effect Jan. 1, said Doug Shelton, a spokesman for IBM Corp. Shelton also said in an email that IBM’s 401(k) plans remain “among the best in the industry.”

“This change reflects our continuing commitment to invest in our employee 401k plans while maintaining business competitiveness in a challenging economic environment,” he said in the email.

The company matches dollar-for-dollar, up to 6 percent, the eligible 401(k) pay savings of U.S. employees hired before Jan. 1, 2005. It matches dollar-for-dollar up to 5 percent for employees hired after that date.

In addition, the company also makes automatic contributions to employee IBM 401(k) Plus Plan accounts - even if the employee doesn’t participate in the plan. The amount of automatic contribution earned, which is 1, 2 or 4 percent, depends on the pension plan formula an employee is eligible for on Dec. 31, 2007.

“The range of company contribution to employees can be anywhere from 6 to 10 percent of pay,” Shelton’s email said.

Lee Conrad, national coordinator for Alliance@IBM, said that “everybody agrees that the plan itself is very good.” What they don’t like is the unilateral change, he said, in which IBM is waiting until the end of the year to drop in its contribution.

“It’s not benefitting the employees, it’s only benefiting IBM,” Conrad said.

Conrad said that if the company has job cuts right up until near the end of the year, those that lose their jobs after the date for the contribution would “lose out on a chunk of money.”

“This is just another way of picking the pockets of employees, and padding the bottom line of IBM,” he said.

Conrad said the company’s U.S. employment has been dropping steadily. The organization estimates, based on information that Conrad said is from sources within IBM, that the company’s U.S. employment is now around 92,000, down from about 160,000 a decade ago. He said a lot of the decline is due to off-shoring.

“And that’s impacting RTP,” Conrad said.

Shelton said the company doesn’t break down its head count below the global head count. In its 2011 annual report, IBM reported it had 433,362 workers. It also reported $875 million in costs from 401(k) plan for U.S. workers in the year, out of a total of $1.48 billion, a total that includes non-U.S. plans.