IBM Employee Benefits: 1914 to 2021
One Hundred Years of IBM Employee Benefits
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Published August 10, 2021
Updated January 1, 2022 |
"For the benefit of the new employees in the business, I wish to state—as I have on previous occasions—that the announcements made today are on the same basis as all benefits which have been announced in the past. They are not given as an inducement to work harder for the company, but as a reward for services rendered because we believe you have earned and deserve them."
Thomas J. Watson Sr., Telephone Address to Employees,1946
Establishing a Leadership Footprint
IBM's history of providing employee-owner benefits is a history of firsts. This is a summary of those firsts: both up and down.
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A Powerful 20th Century Leadership in Improving Employee Benefits |
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Thomas J. Watson Sr. |
- 1921 - First IBM Quarter Century Club
- 1928 - IBM Suggestion Program
- 1934 - IBM Group Life Insurance
- Piecework pay eliminated - 1935 - IBM Survivor Benefits
- 1937 - IBM Vacation Plan
- 1942 - Formation of Watson Fund
- World War II Widows and Orphans Fund - 1944 - IBM Health and Accident Benefit Plan
- 1945 - IBM Retirement Plan Established
- 1947 - IBM Permanent Disability Income Plan
- IBM Veteran’s Benefit Plan - 1956 - IBM Life Insurance Plan
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Thomas J. Watson Jr. |
- 1958 - IBM Employee Stock Purchase Plan
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John R. Opel |
- 1984 - IBM Tax Deferred 401(k) Saving Plan
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A Disastrous 21st Century History of Reducing Employee Benefits |
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John F. Akers |
- 1991 - IBM caps retiree health liabilities
- Retirement multiplier revised downward - 1994 - IBM caps service credit at 30 years—eight years earlier than originally announced
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Louis V. Gerstner |
- 1999 - Conversion from defined-benefit to cash-balance pension plans
- IBM eliminates retiree health plan
"Researchers at Harvard University and MIT analyzed filings from more than 2,000 companies and found that companies near critical earnings thresholds had boosted their earnings the prior year. One of the companies was IBM. As its operating performance was deteriorating in 2000 and 2001 (Louis V. Gerstner), in the wake of the tech bubble bust, the company raised its expected return from 9.25% to 10%. The increase in the assumed return accounted for nearly 5% of IBM's pretax income in 2000 and 2001."
Ellen E. Schultz, "Retirement Heist"
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Samuel J. Palmisano |
- 2005 - IBM reduces employee stock purchase plan (ESPP) percentage from 15% to 5%
- 2008 - IBM freezes U.S. pension plan
- 2010 - IBM eliminates UK pension plan
"In early 2006 (Samuel J. Palmisano), IBM announced that it would freeze the pensions of about 117,000 U.S. employees starting in 2008, citing pension costs, volatility, and unpredictability. . . . In the years since the freeze was announced, the gains from curtailing benefits have added nearly $3 billion to IBM's income."
Ellen E. Schultz, "Retirement Heist"
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Virginia M. Rometty |
- 2013 - IBM 401(k) matching funds not vested until December of each year
- 2014 - IBM retirees (65+) moved to Extended Health
"As of January 1, 2013, IBM will no longer give employees their 401(k) match with each pay cycle. Instead, the technology behemoth will make one large lump-sum payment to employee accounts on December 31 of each year. The motivation?
"Most independent observers say we should follow the money – IBM’s money, that is. According to the Wall Street Journal, IBM payed out $875 million in employee 401(k) contributions in 2011, a number that will likely decrease as a result of the planned change in 2013."
"Most independent observers say we should follow the money – IBM’s money, that is. According to the Wall Street Journal, IBM payed out $875 million in employee 401(k) contributions in 2011, a number that will likely decrease as a result of the planned change in 2013."
Helen Olen, "IBM Makes Changes to its 401(k) Plan," 2012