Thread regarding IBM layoffs

The blanket answer I’ve seen being given is “go somewhere else if you don’t like it” and that on top of not releasing recent employee engagement survey results seems very much intentionally and willfully making harmful decisions for employees with no one in place to check or counter or represent employees rights. They simply do not care is the answer. Depressing and infuriating as that is..Surprising we have so many government contracts with so much work being offshored, surprised it’s legal.

This was really a stupid decision by IBM executives. Seriously, do you executives involved here not believe this would cause a serious moral problem and cause current and future employees to look elsewhere?

Long time IBMer who's seen many back-stabbings by IBM. If you're 40 or below, run, don't walk, to polish up your resume and find another job. I've know younger peers who jumped ship, got raises, and are doing much better with benefits. IBM is a big dying whale, may last a good long time, but it's going to really stink while it does. This RBA alone would have me leave because only you invest a bigger chunk of your income for retirement, you'll need to work an extra 5 years or so. And there's really few reasons to work here. You'll use old technology, like CMVC. Or you'll use a less-favored technology in your product because IBM has invested so much money in it. You're not padding your resume here, because the skills you get here or not the hot ones.

When you treat staff as contractors, then they act as contractors. Their loyalty extends as far as their paycheck, and not much farther. They'll hang around and put in extra effort if the work is interesting, but for the less-than-interesting work you'll see a lot of people just "phoning it in", quite literally these days. Go to the office? Wear business attire? They'll be happy to call into conference calls from the house, but ask for anything more and they'll be off to greener pastures. And maybe that's the objective.

It will be interesting to see if IBM has a new entry in their balance sheet for the accrued liability for this new plan after 2023 fiscal year financials are released. Won’t hold my breath on this one though.

With this one move, IBM just gave most of us a long-term pay cut, as well a broken promise from their side of the employment agreement. It seems to me like a good reason to start spending a few percent or more of my time (maybe 4 hours per week) doing other things instead of the IBM work I would have done in the past - for example, polishing the resume, applying and interviewing at greener pastures. When it comes time to leave this place, I will take my 2 week notice period as sickdays, leaving behind only an empty laptop.

Ah the ghost of Tim Ringo re-emerges Tim predicted 15 years ago that IBM would go to a 100k worldwide work force. He said all of consulting would eventually be gig/crowd sourcing employees. WHY Because IBM wouldn’t have to pay retirement, healthcare, etc etc. AH Tim you were a man ahead of his time.

You're onto something, but I suspect the actual thinking is much simpler. IBM wants labor without commitments. If they could fire everyone today and rehire everyone as contractors, then they would do so. They certainly did a lot of that in GTS...the only reason they didn't go any farther than they did was for staff retention...many of the "employees" that were RA'd would just go elsewhere and would not work for IBM at any price.

So the future for all remaining staff is to expect nothing other than a paycheck for their labor. No retirement benefits, no healthcare benefits, etc. IBM won't make any commitments for labor, so I would expect labor to reciprocate (or not, as the case would be). Look for overtime to drop...

There is something quite more fundemental going on here with this change. Compare what IBM just announced (the elimination of retirement) vs what labor has just won (UPS, airline pilots, UAW, etc). They are moving in exactly opposite directions. This tells me IBM has a completely different view of its future (short term outlook) vs most of the major labor organization (longer term contracts) What that is is anyone’s guess, but I suspect it does not bode well for employees. Perhaps high tech’s view is a gig economy moving forward where as labor has a more traditional view. Cash flow wise, this change helps IBM obtain lower borrowing costs, but it certainly does not help it competitive wise when it comes to labor. Could IBM be signaling it’s going to move even more things off shore? It sure looks like it.

The simple fact of the matter is that IBM is no longer offering any sort of retirement benefits to most employees. It is up to the employee if they are willing to accept this situation.

In every workplace I've been at where retirement benefits weren't offered, compensation consisted of a paycheck plus stock options. These workplaces were tiny shops, just getting started, and they were run with short-term thinking. They offered cash for two weeks work, and the employees were willing to labor two weeks in the expectation that they would be paid.

That's where IBM is at now...their "credit" with employees is now good for two weeks, and that's it. They ki-led the retirement plan...historically, companies in these situations have proceeded to floating paychecks, missing payments to suppliers and vendors, etc. It's a rough situation to be in.

Some more info on the new RBA

https://www.usatoday.com/story/money/personalfinance/2023/11/09/ibm-401-k-match-change-retirement-account/71506331007/

The new plan is great for higher income and bad for low income. I think the Excecutives loves it:

Before:
Max contribution: $22500
Max match: $22500
So with a 450 000 salary and 5% match one can get 22500 match.
If one earns 10 Million, still 22500 match is limit

New plan:
High Income:
For example 1.5 Million Base salary (CEO) * 5% = $75 000 compared to previous 22500 match. Great for the needy Excecutives!
Also the raise is great for Excecutives
If one had before 10% or 5% match it was the same as one maxes out at 22500.
Now one gets a raise of 10% - 5%, even though the contributions will go up.

For the low salary employees the new plan is worse:
Need to still work many years at IBM and lending the retirement fund at Treasury rates to IBM. Great.

@8wnr - The RBA is strictly a "notational account" like the Future Health Account (FHA) and no actual money is being set aside by IBM, so ERISA and other statutory protections for retirement accounts do not apply. This is simply a promise by IBM Management (and we all know what that's worth) to pay you a lump sum out of IBM's operating funds when you leave the company. Read the T's & C's - it can be terminated at any time without advance notice. Unfortunately, unionization efforts never succeeded at IBM, so you aren't represented and don't have a labor contract. So, it's an "at will" employment situation, and IBM Management can do whatever they want ... and if you don't like it, your only recourse is to leave IBM. Sorry, but that's the harsh reality. 😕

I’m not an IBM employee but with Honeywell. I’m counting the days until this policy is implemented here. Sorry!

I tried to find the RBA regulation. Cannot find any information on the web (using AI, google, wiki ..)
How it would be for example shown on the W2.
It is not a 401K? When is the money received for taxes? End of the year or when losing the job, quitting?

https://www.irs.gov/retirement-plans/common-errors-on-form-w-2-codes-for-retirement-plans#:~:text=Form%20W%2D2%2C%20Box%2013&text=You%20should%20check%20the%20retirement,IRC%20Section%20403(a).

@5csp I believe you are viewing the current situation correctly. The RBA is nothing more than an IBM promise with zero federal, or state backing to give you the cash they have squirreled away for you when you decide to retire. IBM has made these promises in the past, but has always found a way to modify them to advantage themselves. As time goes on, that promised money becomes a bigger and bigger yoke around current managements neck, and since it’s theirs to give with zero federal, or state obligation, they can modify the terms whenever and to whatever they want. IBM had to hire an army of lawyers to get them, out of the defined pension obligations that they had promised for generations. What makes you think they will play nice now? Cash flow is IBM’s mantra, and as the RBA obligation grows so will the incentive to modify it.

An RBA is not a retirement plan, nor should it be considered to be any part of a retirement plan. It is nothing more than a company store account loaded with IOUs. IBM may be "well-intentioned" and try to honor those IOUs when an employee exits, but given the desperation for cash flow it is more likely that management will be tempted to tap the RBA instead for other purposes. That is what has happened with other companies in the past, and that is why the US government came up with retirement laws over the years culminating with ERISA. Companies simply cannot be trusted to handle the retirement funds of their employees, which is why legal retirement plans in the US are always managed by third parties.

The plan is to end the 5% matching 401k contribution in favor of an RBA "credit" of 5%. To the employee, that means that their total compensation has been cut by the same amount. They MIGHT get that RBA sum back when they leave, provided that the jump through whatever hoops IBM has set up for them (no RA's, PIPs, stay for the full 30 years, etc...who knows what). It is more likely that they'll never see that extra money.

Will it affect the immediate financial situation for the employees? Probably not. Provided that the TDSP or whatever IBM calls it now still exists, they could indeed send more of their salary to Fidelity for employee-directed investment. However, it does mean that that 5% per month is gone.

Lol at whoever thinks we can all afford to contribute 16% to our 401ks - must be nice.

When I read some of the comments here, it really makes me wonder how easy it is to whine, moan, and bi--h about this massive benefits change than it is to actually think about creative ways to build your nest egg for retirement.

Overall, I’ve never worked anywhere thar has such a comprehensive and extensive benefits package. It blows my mind how much the company spends on benefits, including the lump sum 401K match on the last day of year for so many years. Most people do not have the same kinds of benefits that IBMers have. Some people have barely any benefits at their workplace.

So IBM stops matching our 401K and contributes instead to an RBA, which I still don’t fully understand. So what? We can still contribute more to our 401K to offset some of that former match - if you’re contributing 10 percent per month, try for 16 percent instead. We are in control of our finances, and need to reprioritize personal spend and investment based on this benefits change - as challenging as it is.

Of course IBM needs to find a way to generate even more cash! Nothing wrong with that. That’s what really big companies do so they can help their shareholders happy, invest in innovation, and pay their people / vendors, etc…etc..

I believe there are multiple reasons IBM has decided to move in this direction. Some good, and some bad

1. IBM’s employee participation in the current 401 is quite poor vs the industry
2. Due to poor participation IBM decided to guarantee participation via new offer
3. This new offer advantages IBM due to funding requirements (cash flow)
4. This new offer makes IBM less competitive vs competitor (benefit take away)
5. New offer shows IBM de-emphasizing USA employees for offshoring
6. IBM wants to be a fundamental leader in Fortune 500 benefits changes. They did this on 401’s when offered and again in traditional pension elimination and cash balance offerings

Figure. And the IRS just announced they are increasing the 401 K limit for 2024

IBM is desperate for cash flow...end of story.

IBM has a tremendous amount of debt, which is rising along with the cost of borrowing.

IBM is desperate for cash flow...end of story.

Have you ever seen (or worked in) a failing restaurant? After you change the decor, the menu, the cuisine style, etc. and nothing seems to work, the managers and well-connected employees loot the place for everything before the liquidators arrive. Spare supplies, food ingredients that are in the kitchen, unsold booze, cash in the till, equipment and furniture that hasn't been nailed down...stuff like that. Checks to employees bounce, along with payments to suppliers, vendors (including health and benefit payments), tax payments, Social Security, etc. The managers have sweet words for the employees, because what else are they going to say?

IBM isn't quite at that point yet, but they're closer than they have ever been in a while. They just ki-led a perk which is pretty much a standard in any large American corporation...the 401k. What comes next?

Definitely yield theft and surprised this is legal although apparently IBM lost a lawsuit to employees in the past with regards to some other terrible pension plan they forced on people. So considering the lack of transparency I am very worried and not at all confident that they will cough up that sweet 3% per year guaranteed earnings that will track with 10 year treasury bonds (shoot me) when I leave which hopefully will be in next 6 months (because I just cancelled my plans to retire here). Too many bitter pills to swallow lately including software leadership making blatantly homophobic comments during a visit to California for a live streamed All Hands with employees that we all watched in person (with zero repercussions because you know, BCG yeah!) plus mandated RTO which I could even swallow but then you factor in no bonuses or RSUs and now they’re cutting my potential future earned income for my retirement by at least a 1/3 and will force me to contribute even more into a Roth and 401k with NO MATCH if I stay and want to offset this sketchy weird pension plan with low growth and managed and owned entirely by our wonderful employer who we all don’t trust at all anymore. Too many high stakes variables for this guy. I value stability and thought I’d find it at IBM, feel like a mo--n now. And they snuck this RBA announcement buried at the bottom of the HR benefits email casually and on us after the engagement surveys were returned to leadership so they can all pat themselves on the back for the year and get their nice stocking stuffers while the rest of us get this huge lump of coal. Oh you know, we are just voiding s huge part of your job offer but no biggie! Ge-z to think I turned down recruiting offers at Cisco and other places because I thought they were too antiquated for this he-l - thinking this would at least keep me financially stable into my golden years. My fury has no bounds. SIDENOTE: did ANY of your managers or leaders address this? Because no one did in our org which is even creepier. I don’t trust any of these psychopaths anymore. And we are making them the most money right now in our org, but no promotion or bonus or 401k match for you plebs. Isn’t that charming? Also not sure about you all but we have zero work life balance on our team due to no backfills and no promotions just constant pressure to triple development output and churn and burn baby! This makes me sick to my stomach and I’m furious I wasted year here. Don’t ever believe a company cares about you as an employee- always look out for yourself and let’s all go get better jobs shall we? Anyway that’s what they want- yield theft and planned attrition amirite? Worst part of this is feeling so helpless and cornered like we all know there is nothin we can do but leave at this point because when you think it can’t get worse they’ve already proven it can let’s not stick around to find out what other surprises Arvind and crew will spring on us all. I am done. Off to update the ole CV and hope to god I didn’t miss application period for this year. Good luck everyone.

It’s yield theft. Pure and simple. So extremely sketchy and not at all the industry standard…Makes me very worried fi still be working here if the company is stopping to this level. Also that was one of the major perks of being at IBM-you can rationalize lower comp then peers in the industry by justifying hey I have major stability and a great 401k benefits set up- with that gone and all the other rapidly dwindling benefits makes IBM more and more an undesirable place to be long term. At this point if you are 45 and below you would be damaging your financial future to stay. Do you really want your retirement to be impacted? Not worth the nice coworkers when you factor ub toxic moves like this and terrible management plus no RSUs and barely any growth to room. Total gaslighting move and not the only one..this will be great for you, they said..just shut up and give us your potential earned retirement savings they said. We just got screwed big time by Arvin’s and crew. Happy season of Giving, I mean taking..

https://www.theregister.com/2023/11/02/ibm_401k_changes/

Well my current (for a short bit now) company was very misleading

3K Match (but only 50% per 1st two years)
BONUS (vests at 0,0, 20, 40, 60, 80, 100) percent

eh?

If 401K is part of your employment contract, they just voided the contract, so you can do whatever you want from your side as well - ignore whatever restrictions they impose such as we-own-all-your-ideas-outside-of-work clauses.

Is IBM the first large corporation this year to terminate their 401K contribution?

I've worked for shops that had no retirement plan (nor substantial benefits of any kind). There's nothing philosophically wrong with the setup, with the caveat that my paychecks were always higher to make up for the financial risk I'm taking in working with those firms.

What's IBM offering in return for ending the current retirement plan?

This is just IBM taking a 4th bite at the pension apple. Defined pension, cash balance, 401k, and now RBA. IBM has always led the parade on pension reform, and I expect that’s what this is yet again. The major blow back that I see for this, is that it positions IBM at a competitive disadvantage vs its competitors especially in the USA. I suspect IBM has looked at the demographics of the USA employee population (older and shrinking as it offshores) and determined a “niche” go to market onshore strategy can survive this. Remember the CEO/CFO mantra It’s all about free cash flow, and I expect this change only enhances that metric. This very much reminds me of how IBM addressed health care for folks who were between 40-55 when they changed the pension rules. They invented the FHA which limited IBM’s future risk, and was a “wink wink nod nod” promise that IBM would get you to Medicare. Most current retirees are now finding out IBM can change the rules (join medicare advantage or your FHA is worthless) at their whim and the employee has to suffer the consequences. IBM didn’t renege on their FHA promise, BUT they did change the rules to enhance FCF. This change is nothing more than reducing IBM’s future risk and enhancing FCF

When a business is in trouble, all parties do everything they can to protect themselves and extend whatever longevity they may have. By ki-ling the employee retirement plan, IBM will effectively put itself on a "cash up front" relationship with its employees and many of its vendors. In other words, no more credit, for the company is running out of it. If you thought getting management approval for a business trip is bad, try having to prepay all hotel, flight, car rental and per diem expenses IN ADVANCE, before the trip is taken. After all, that's how small businesses have to do it when their credit is not yet established. Imagine employees insisting on cash payment before taking trips...you don't want to get stranded, after all. One can let their imagination run wild to see where this is going.

Question: what were changes to retirement/pension OUTSIDE the US? Anyone aware of how retirement plan in India works? Were they also targeted?

In the benefits seminar, they had the gall to frame this as a potential benefit to younger employees so they can have some retirement savings while paying off student debt or saving money for a house instead of contributing to the 401(k) program just to get the match.

This formula is similar to what IBM did when they ditched the the old retirement plan in 2000.
Of course they discontinued the new retirement plan altogether six or seven years later so stay tuned for this to be eliminated in the not to distant future.

The interest rate for this match replacement plan, is similar to the previously mentioned "new retirement plan", which was also based on t-bill rates. For the old plan, the t-bill rates were dismal until 2023 thus providing no real benefit as the return was outstripped by inflation even when inflation was low. It is most likely the current t-bill rates will retreat again in the next 1-3 years causing the same miniscule growth of the fund.
This is a big hit to the employee. Not only are they providing 1-3% less "match" (depending upon hire date), they are not letting employees leverage the power of the market for long term returns. It also takes away the advantage with the government gave last year which said if you were contributing to a 401k Roth, the match would also be Roth. Lastly, these funds are never really secure for the employee until they leave and take a lump sum as the funds stay on IBM's books and are not transferred to a third party like Fidelity. This is flat out bad news for current employees. Especially the young people who IBM claims they want to attract. Notice this change didn't happen in the last couple of years when companies were competing for tech employees, they waited until the tech market was softening.
IBM rarely misses a chance to take away from the employee when it comes to a chance to add a little bit to the bottom line by taking money away from the employee, it is just another on the "death by a thousand cuts" IBM has inflicted upon its' work force over the last quarter of a century.

IBM is running out of money, and is desperate. 401k matches are funded by handing over real cash to Fidelity (I assume they are still handling the accounts). This RBA thing is nothing more than a company store account using IOUs. It might not even qualify as a retirement plan under federal law (ERISA), because it is unbacked by real money in the trust of a third party. If/when the company goes under, RBA "accounts" are nothing more than general liabilities (unsecured debt) held by the most junior of creditors (the employees). All unsecured debt is wiped clean during bankruptcy, so the employees wouldn't get anything.

It's too bad...IBM has been playing similar games with the retiree health reimbursement account funds...they tried (are trying) to force retired employees into a Medicare Advantage plan from United Healthcare...those retirees who wouldn't cooperate (they kept their own health plans) didn't get the HRA benefits they were otherwise entitled to.

Surprised they would do this knowing it affects the 25 year olds. Not usually IBMs MO. Usually things like RAs, PIPs, RTO, collocation are dinobaby targetting. Now that those wells are running dry they want to squeeze the grads - ouch. Someone’s gotta fund those nice executive bonuses - might as well be on the backs of the working bees. Remember this when you watch the CFO Christmas video they’ll put out next month about all the hard work and accomplishments throughout the year. As a thanks we’re going to dip into your retirement.

"It's like déjà vu all over again!"

This is just the latest scroow job by IBM management on retirement benefits. How many times do workers have to get kicked in the nuts by this poor excuse for an employer before they finally wise up and quit?

If there is a cash problem, IBM execs made a bad decision overpaying for Aptio. Was it like 5 or 6 billion they paid for it using cash?

@xyj+1pnNRDkR An IOU is as good as money, sir. - renowned financial expert Lloyd Christmas