IBM offers early retirement package, protection from layoffs

An internal IBM (NYSE: IBM) memo leaked Tuesday outlines plans to offer an early retirement package to U.S. employees that offers those who accept by the end of next year protection from layoffs.

Employees who agree to retire by Dec. 31, 2013, would take a 30 percent cut in pay along with a 40 percent reduction in work requirements.

An IBM spokesperson confirmed the memo and said workers were notified about the plan Tuesday. He said the program was not a move to cut costs or to lower its U.S. headcount.

“IBMers have been asking for more ways to ease into retirement,” Doug Shelton, director of IBM corporate communications, said in an interview.

“Now we have a program that gives them the options they need. It is a completely voluntary program.”

The deadline to apply for the program is June 5, Shelton said.

Shelton said IBM knows how many employees are eligible to participate, but he would not disclose the number.

IBMers who are qualified to apply are:

• Employees who received a satisfactory or higher performance rating in 2011
• Employees who participate in IBM pension plans currently or by Jan. 1, 2014
• Have met the criteria of at least 30 years of service regardless of age
• Are at least 55 with 15 or more years of service
• Or are at least 62 with five or more years of service
• Or are at least 65 with one year of service
• More recently hired IBMers who participate only in IBM’s 401k “Plus” plan if they are age 62 as of Jan. 1, 2014

(Plan helps company and workers, Shelton says. Read here.)

Lee Conrad, the national coordinator for Alliance@IBM and a retired IBM employee, said he had received copies of the memo “from IBM employees.”

“Transition to Retirement”

In the memo, IBM calls the program “Transition to Retirement.”

It is described as a “a one-time, voluntary program designed to balance the needs of our retirement-eligible employees in the U.S. with the needs of our business.”

“Transition to Retirement is for IBMers who are at or near retirement eligibility in the U.S.,” the memo reads.

“The program offers participants 70 percent of their pay for working 60 percent of their schedule. They’ll receive the same benefits they do today, most at a full-time level, including health benefits and 401(k) Plus Plan automatic company contributions. They’ll also be exempt from any resource actions that may occur during the Transition to Retirement period. In return, all participants agree to retire on or before December 31, 2013.”

“Resource action” is IBM’s terminology for layoffs.

However, the memo says it’s not guaranteed that all IBMers who apply for the plan will be accepted.

“This program is completely voluntary for IBMers, and as a manager, you have a say too,” the memo reads. “You can decline an employee’s application based on established criteria driven by business need.”

IBM has made cost-cutting and improvement in profit margins a stated goal under a “Roadmap 2015” plan.

Roadmap or ‘Roadkill’

Conrad, who leads the organization that seeks to represent IBM employees, ridiculed the plan

“It is a way to cut the work force and also give IBM an accurate count of how many will leave,” he said. “It appears the RA’s have been too haphazard for them.”

While the union numbers under 500 official members, it does receive tips, memos and feedback from across the company, and some employees referred to the plan as “roadkill.”

“I am already getting email from some IBMers that have mixed feelings,” Conrad said about reaction to the plan’s offers.

“Many are already working way over 40 hours a week,” he explained. “So 60 percent of their schedule for 70 percent pay is not appealing.”

Declining U.S. workforce

IBM employs an estimated 10,000 employees across North Carolina. The union says it has been told that the RTP work force numbers fewer than 7,000.

In 2006, IBM sold its PC division, which was primarily based in Raleigh, to Lenovo. That decision was among the biggest in reducing IBM’s local work force. In 2007, IBM had some 11,000 employees in RTP and the site was widely acknowledged as Big Blue’s largest campus. IBM also recently announced the sale to Toshiba of a retail business product group that employs more than 600 people locally.

Some 1,900 North American-based workers have been laid off this year, based on “resource action” documents provided to Alliance.

Over the past several years, IBM has been cutting its U.S.-based work force. The company no longer specifies how many employees it has by geographic location.

The trend over the years (Alliance estimates indicated by asterisk):