GERMANY – Opposition from employee representatives has forced IBM in Germany to temporarily halt plans to transfer half of its employees from a defined benefit pension scheme to a defined contribution one, IPE has learned.

IBM employs a total of 22,000 people in Germany, half of them on the old DB scheme. Under the scheme, the employee’s pension benefit is calculated based on earnings for the last five years before retirement.

Since mid-2000, the other half of the employees has been in a DC scheme where IBM contributes to a fund and where the employee has the option to do so. The accrued savings are not, however, paid out as a monthly pension but can be withdrawn as the employee wishes.

Last January, IBM Deutschland announced that it wanted to place all of its employees on the DC scheme, adding that it expected to save “several hundred million euros” from the move. The announcement was part of a campaign by the US-based computer giant to slash worldwide pension costs.

But worker representatives at IBM Deutschland, which must agree to pension plan changes, rejected them. They said the changes meant significant benefit cuts, particularly for 4,000 employees who were newer members of the DB scheme.

“IBM’s workers’ council has since obtained expert opinion that reflects that it is in a very good legal position to fight the proposed changes to pension plans,” said Rolf Schmidt, an official from the Verdi services union which is advising worker representatives at IBM.

“As a result, the council is not willing to negotiate the changes and the firm’s management has so far dropped the issue,” added Schmidt, who said he was involved in negotiations between the council and management on the issue.

Ursula Diel, a spokeswoman for IBM Deutschland in Stuttgart, did not return calls from IPE seeking additional comment on the proposed changes to its pension plans.

Schmidt also said that while management at IBM Deutschland had dropped the pensions issue, it has since scrapped “holiday pay” for its employees in order to save €40m.

Meanwhile, Berlin-based Verdi confirmed that IBM Deutschland had mounted a legal action against Rudolf Quetting, a member of the workers’ council at the firm, to get him dismissed.
A Frankfurt court has yet to set a date for a hearing on the action.

According to Verdi, the action was initiated after Quetting sent a letter to the computer firm’s management that criticised the pension plan changes and the scrapping of holiday pay. “Mr Quetting probably went a bit too far by personally attacking chief executive Johann Weihen,” Schmidt said.

In any event, Verdi sharply criticised the legal action against Quetting, likening it to a frontal attack on the principle of co-determination at companies in Germany.