IBM said on Thursday that it had agreed to pay $300 million to resolve certain claims in the class action lawsuit relating to its new cash-balance pension plan.
Under the settlement, current and former employees would be eligible to receive an incremental pension benefit worth approximately $300 million in exchange for the settlement of certain claims and a stipulated remedy in the event that IBM loses the remaining cash balance claims on appeal. The agreement limits IBM’s potential liability for the claims being appealed to additional $1.1 billion.
Last year, a U.S. District Court judge ruled that IBM’s cash-balance pension plan violated the age of discrimination provisions of the Employee Retirement Income Security Act of 1974.
The company is appealing the ruling.
If IBM prevails on the claims being appealed, there will be no additional liability, IBM said in a statement.
IBM said that it continues to believe that its pension plan formulas are fair and legal.
“The position that cash balance plans are unlawful seriously jeopardizes the security of an already fragile U.S. pension system,” said Randy MacDonald, IBM’s senior vice president of human resources. “While IBM has the financial strength to deal with the ramifications of this case, many companies do not. If the ruling in this case is upheld, many companies will be forced to end their pensions, reduce the number of employees who receive pensions, or become noncompetitive which could result in job losses.”.
(via IBM)
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