Why Did IBM Reopen Its Defined Benefit Plan? Will Others Follow?

Alicia H. Munnell, Yimeng Yin and Jean-Pierre Aubry

Issues in Brief from Center for Retirement Research

Abstract: IBM has reopened its defined benefit plan to use the plan’s surplus – rather than corporate cash – to fund retirement contributions. This shift has been fueled by a more favorable regulatory environment and the improved funded status of defined benefit plans. While using “trapped surpluses†helps the firm, workers may well come out behind unless the gains are shared. Interestingly, the analysis finds that only a handful of other large companies are likely candidates to follow IBM’s lead. Thus, the move should be viewed as a financial maneuver, not a meaningful change in the provision of retirement income.

Pages: 9 pages
Date: 2024-02
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