Monday 6th February 2006

IBM accused of closing final salary pension scheme by back door

Amicus is today accusing IBM of seeking to close its final salary pension scheme by the backdoor.

The union says the pensions changes announced to its UK workforce will slash the pensions earned by employees and force people to leave the final salary scheme early by exerting financial pressure on people to join a money purchase scheme instead. The changes involve making only two thirds of any future salary increase pensionable, which will progressively erode the future pension of employees remaining in the scheme and lead to its? eventual closure.

Calculations by the union suggest that employees could be worse off by anything between 10 and 40% depending on salary, age and present and future service. Someone on £30,000 with 20 years to retirement could have their pension value slashed by nearly a quarter, the equivalent of over two years salary. Amicus says this will affect both younger people expecting promotion and also older people with limited future career expectations and substantial past service.

Peter Skyte, Amicus National Officer for IT, says:

?IBM is a highly profitable company and these pension changes will cause a chain reaction leading to a meltdown in final salary provision for its employees

?These changes represent a tax on old age affecting its UK highly skilled workforce for years to come. This is a war on talent.

?The IBM Chief Executive stands to receive an annual pension higher than Sven Goran Eriksson?s annual salary and Amicus will be doing everything in our power to retain decent pension provision for IBM employees in the UK.?