IBM proposes cut in pension

After being in news for another round of layoffs recently, IBM's back in news this time for change in its pension policies.

IBM is reportedly proposing to close its final salary pension scheme to its current UK and Ireland staff. UNITE, the largest trade union in the UK, has reportedly warned the IT company of 'backlash' from thousands of employees over its decision which is likely to affect some quarter of its workforce. IBM UK has around 18,000 employees.

The news is said to have made hundreds of angry IBM employees join UNITE to fight IBM's decision to alter its pension scheme.

IBM closed the defined benefit, or final salary, pension plan to new employees a few years ago. The company says the move is to help the company "maintain competitiveness" in the tough economic climate.

Employees on final salary pensions are guaranteed a pension at the end of their career based earnings and length of service. Employees on a contribution scheme put money into an investment fund, which is used to buy a annual pension.

According to Unite's calculation employees in their mid-50s could lose up to £200,000 as a result of these changes compared with the retirement pension they had expected to draw before this announcement in July.

Recently, Japanese giant Fujitsu also announced its proposal to close its final salary scheme.