IBM Continues Trend of Freezing Pensions
IBM just recently announced that it will freeze is defined benefit pension plan as of 2008 for all of its existing employees. IBM follows in a continuing trend by other seemingly healthy employers who have chosen to freeze their existing pension plans and focus on their 401(k) plans. These include NCR, Circuit City (in 2004), Hewlett Packard and Verizon (2005) and now IBM in 2006. According to this article, quoting research by Watson Wyatt, 89% of Fortune 100 companies offered traditional defined benefit plans in 1985. By 2001, however, that number had fallen to just over 50% by 2004.
I suspect we'll likely see this trend continue. As a result, there will be more pressure on HR professionals to provide greater educational resources to employees as they assume more of the risks associated with planning for their own retirements.