International Business Machines Inc., Armonk, N.Y., will freeze its $48 billion pension plan and bolster its $26 billion 401(k) plan starting January 2008, according to a news release issued today.
IBM will double the current company match in its 401(k) plan dollar-for-dollar up to 6% of salary and offer a 4% automatic contribution. The company will also automatically enroll new employees in the 401(k) plan.
"These changes … will give us more predictable retirement plan costs, along with benefits that remain ahead of, but more in line with, our competitors," Randy MacDonald, IBM senior vice president of human resources, said in the release.
The company expects to save $450 million to $500 million for 2006 and $2.5 billion to $3 billion for 2006 through 2010 through changes expected to be made in other non-U.S. plans, based on year-end 2005 pension assumptions.
R.L. "Jay" Vivian, assistant treasurer and managing director, and James H. Rich, senior investment strategist, could not be reached for comment.