Readers of this blog know that that I’ve spent a lot of time exploring the attack on pensions. Now, comes one of ths most ominous signals that corporate America is on a relentless path to end the concept of real pensions for workers: IBM announced yesterday that, beginning in 2008, it would freeze pension benefits for American workers receiving defined-benefit pensions.
The Wall Street Journal, carrying the story on page 3, correctly notes that, “The effective deactivation of one the nation’s biggest pension plans marks a significant milestone in the gradual but persistent shift away from traditional, defined-benefit plans at major U.S. corporations.” Both The New York Times and The Financial Times carry the story on the front page, with the FT story emblazoned with a large bold banner headline “IBM Freezes Pension Scheme.” And, in the story, Brian Foley, a U.S. compensation consultant, says, “This [latest IBM announcement] is clearly another large, and significant, nail in the coffin for defined benefit plans across America.”
The details: after Dec 2007, benefits will no longer accrue to the defined-benefit programs that cover 117,000 workers (that is, programs that promise that a retired worker will receive a specific amount of money each month). Instead, IBM will force everyone into 401K plans. Welcome to casino retirement–if the market is doing well, when you retire AND you happened to be in a plan that made the right investments, you might do okay. But, if the market goes south, it’s dog food for breakfast, lunch and dinner.
IBM’s annoucement will rock the entire pension system because IBM’s plan was fully funded and solvent; the plan was not in an airline, steel or auto industry crisis where the underlying business was losing billions of dollars. IBM simply decided that this was a good place to cut costs and generate more corporate profits. In the Times’ story (registration required), Mary Williams Walsh writes, “But the move by I.B.M., a financially healthy company, shows that even some of the most secure businesses in the country no longer want to bear the risk or the expense of providing a firm promise of a lifetime pension.
And where is the political outcry? None. In no story do we hear a single politician raising an outcry about IBM’s decision. Few Democractic Party members have taken on the assault against the pension system–with the notable exception of Rep. George Miller. Each time a new attack against pensions comes–whether the ripping away of pensions for airline workers (that was money each worker had put away from their paychecks!!!) or the attack by the transit authority in New York against its workers’ pensions–there is a deafening silence from the political party that supposedly advocates for working Americans.
No wonder the American people see very little difference between the two parties. I have a cartoon pinned above my desk right now–it shows a boxing ring, with two fighters, one an elephant and one a donkey. The elephant is staggering, with the words “deficits,” “Iraq,” “Katrina,” “Delay,” and “Rove” circling its head. The donkey’s ringside manager says, “Now’s your chance, kid, give him your best shot.” The donkey’s response: “But what if I hurt my hand?”
Where is the outrage to the attack on pensions? This is an issue that touches all workers, in so-called “red” states or “blue” states, union and non-union. Along with the outsourcing of jobs and the search for the lowest wage in the world, the abandonment of responsibility for a secure retirement for workers is a deliberate corporate policy that must be challenged.
