IBM, which decades ago helped lead the shift from defined benefit plans to defined contribution plans, recently told U.S. employees it will be scrapping its 401(k) match in favor of funding what it calls a "retirement benefit account."
Starting next year, IBM will no longer provide a 5% match and a 1% automatic contribution into an employee's 401(k).
IBM says the change adds a stable and predictable benefit to employees and helps diversity their retirement portfolios.
"Under the plan, IBM bears 100 percent of the risk and must be prepared to pay the benefit at time of employee separation," IBM said in a statement.
"Other companies may not have structure to pull off this type of change," said Craig Copeland, director of wealth benefits research at the Employee Benefit Research Institute.
Persons:
Craig Copeland
Organizations:
IBM, Treasury, Finance, Research Institute
Locations:
New York