IBM Workers: Pension Change Hurts

IBM workers failed at a stockholders meeting Tuesday to reverse changes to their pension plan but won enough support to force a vote at next year's meeting, CBS News Correspondent Richard Schlesinger reports.

IBM workers have been fighting the changes since they were announced last July, when IBM followed the example set by hundreds of other companies, including CBS, by adopting a "cash-balance" plan instead of a traditional pension plan.

The Federal Equal Employment Opportunities Commission is investigating whether the pension changes amount to discrimination against older workers.

Joining the IBM workers at the stockholders meeting Tuesday was Rep. Bernie Sanders, I-Vt., who has described himself as a socialist, but became a capitalist to get into the meeting.

Sanders purchased five shares of IBM stock to buy his way in to the annual meeting and participate in a vote to reverse the company's pension plan changes.

"As a result of what IBM did your gonna have thousands of workers who are gonna see substantially smaller pensions," said Sanders.

Cash balance plans use a complex formula that many feel will leave some older workers with smaller pensions than they had been promised.

Traditional pensions base workers' pension payments on the salary earned during their last few years with the company—when most workers make the most money.

Cash-balance plans base the pension on the average salary earned over a worker's entire career with the company.

The cash balance plan is portable, and therefore more attractive to younger workers who don't plan too stay with one company their entire career. IBM says its new pension plan is typical—even generous—for the computer industry.

But older workers say they have been cut out of the traditional plans just before they would begin earning the lion's share of their pensions. Sanders claims the change could cut workers' pensions up to 50 percent.

The congressman says IBM's move amounts to age discrimination because it cost older workers more which is why the EEOC is investigating.

"We've been really focusing on these questions as a priority because understand that people's future are at stake," explained the EEOC's Ida Castro.

This dispute has made unlikely activists out of quiet conservatives. Bill Syverson, an IBM company man, is now fighting the company. He came to the annual meeting still button-down, but pretty fired up.

"When you're in this kind of a situation you know you're right. It's not a radical idea. It's normal to you," said Swyerson.

Asked what he planned to do with his newly-acquired IBM stock, Sanders, who didn't get to speak at the stockholders meeting, said, "We'll I think now that I was here and didn't even have the opportunity to speak I'll be selling it soon."

The resolution, offered by more than 300 stockholders, would have given empoyees the choice to remain in the traditional pension program or join the new, cash-balance plan.

The proposal had not been expected to pass, but the tally had 755.4 million shares against the proposal and 299.7 million, or 28.4 percent, for it. By getting more than 3 percent of the vote, employee shareholders won the right to bring the issue up again at the next year's annual meeting.

Some of the support for the resolution came from labor unions and other institutions that own IBM stock, such as the California Public Employment Retirement System, which holds 9.2 million shares.

Since September, IBM has allowed a choice for employees at least 40 years old with at least 10 years' service. That option allows about 65,000 employees to retain their old pension package.

According to Sanders, 300 companies have switched to cash balance plan since 1985, including AT&T, Monsanto and RJ Reynolds.