Big Blue joins the rush to ditch final salary pensions

IBM said it will freeze the pension plans of some 120,000 employees in the U.S., effective at the end of next year, and will offer instead an improved 401(k) plan.

IBM's move is part of what the Washington Post calls a corporate stampede away from traditional pension plans. IBM officials called the change essential to remain competitive with foreign and domestic information-technology rivals. The freeze means that benefits earned by current workers up to Jan. 1, 2008, will be preserved but that after that date, they will not increase. The company had already eliminated traditional pensions for new hires starting last year.

Here is the last prediction for 2006. There will be a lot more companies doing the same as IBM and Rentokil (see post on 21/12/05) Dick Stroud