Old-timers squeeze $300m out of IBM
$1.1bn to go
IBM has agreed to shell out $300m to settle part of the claims brought against it in a pension plan dispute.
This deal between IBM and a collection of US employees suing the firm still hinges on court approval and doesn't completely settle the matter. IBM will pay the $300m, which includes attorneys fees, to take care of "certain claims," and then go on to appeal other claims. Because of this agreement, IBM's liability with the remaining claims has been capped at $1.4bn.
IBM will take a charge of $320m in its third quarter as a result of the settlement.
"IBM continues to believe that its pension plan formulas are fair and legal," it said in a statement. "The company has reached this agreement in the interest of the business and IBM shareholders, and to allow for a review of its cash balance formula by the Court of Appeals."
The class action lawsuit dates back to 1999 when an IBM employee charged the company with unfairly changing pension plans. A US District Court ruled that IBM's cash balance formula lets younger employees earn more interest by the time they reach retirement age than older employees. IBM has vigorously denied that this was the right conclusion to reach.
More than 1,200 retirement plans would be considered illegal under current rulings in the matter. ®