US - IBM should be commended for addressing the financial security needs of their workers and retirees, said James Klein, American Benefits Council president.
Klein made the announcement after IBM last week announced plans to freeze its US$48bn pension plan in 2008 and opt to enhance its 401(k) benefits, a move which brought the company a barrage of criticism.
But Klein said IBM had “demonstrated tremendous thought” by delaying plan changes for two years, and added it had made “very valuable” improvements to its “already excellent and generous” 401(k) plans.
In a public announcement last week, Klein said: “Companies that provide retirement and health benefits – especially very generous benefits as IBM has and will continue to provide – are the employers who deserve to be commended for addressing the financial security needs of their workers and retirees.”
Klein added that Congress and the Executive branch of government could help the situation by providing a legal environment that makes it easier for companies to continue offering employee benefits programmes.
IBM’s announcement was reflective of an ongoing trend among many companies away from DB pension plans toward greater reliance on improved 401(k) plans, he said.
The American Benefits Council believes strongly in the value of both DB and DC plans and is working to preserve an environment where both types of plans can thrive, said Klein. “But we also recognise that every company is faced with a unique set of challenges and needs to design its benefits and compensation structure in a way that makes sense for its business realities.”
Jonathan Stapleton asks whether newly-accredited professional trustees should be a statutory fixture on pension scheme boards.
Savers are being warned by the Insolvency Service to guard their pension pots from investment scammers and negligent trustees as it winds up 24 companies.
Respondents say they should only be required in certain situations as the system is not broken.