The Association of U S West Retirees



IBM to Provide Financial Advice for Workers
By Jilian Mincer
The Wall Street Journal
Friday, March 9, 2007

International Business Machines said it will provide free, comprehensive financial advice to its 127,000 U.S. employees as the company prepares to replace its pension with an enhanced 401(k) plan.

The advice, which will be tailored for individuals, will go far beyond how employees should invest in the company's 401(k), also covering topics such as college savings, debt management and retirement savings outside the company plan. While financial planning is a common perk for executives, this is believed by experts to be the first time a major U.S. company is providing this level of individualized advice to all employees.

It isn't clear how quickly, or whether, other companies will match IBM's new plan. IBM is often a leader in benefits practices, and some benefits consultants say the trend toward providing more-comprehensive advice will continue to grow.

IBM may have felt it necessary to sweeten the pot for employees after the changes it has made to its retirement benefits in recent years.

Some employees sued IBM in 1999 after the company switched from a traditional defined-benefit plan to a "cash balance" plan, which paid lower benefits to some older workers. In January 2006, IBM said it was eliminating its pension plan to save money, and would switch to an enhanced 401(k).

IBM spokesman Clint Roswell says the company is providing the new "IBM MoneySmart" program because employees need more financial information. "We realized the burden has shifted, and there's a strong sense of our legacy," he says.

Fidelity Investments and the Ayco Company LP, a unit of Goldman Sachs Group, will develop and deliver the new program, which is being launched later this month. While a number of companies offer Web-based advice to workers, especially about their 401(k) plans, the IBM program will provide individualized advice on a wide range of financial issues.

The program will provide online tools, educational seminars and one-on-one telephone and in-person planning sessions with financial advisers. Partners and spouses also will be able to attend the seminars and counseling sessions.

Until now, IBM has provided both a pension and a match to workers who contributed to the company 401(k) plan. After Dec. 31, employees will stop accruing new benefits in its pension plan.

Write to Jilian Mincer at