IBM in pension change legal fight from ex-employees

IBM has its UK head office in Portsmouth, Hampshire

IBM is facing legal action from 250 ex-employees who claim they were "forced" to take early retirement before changes to the pension scheme.

The action is being taken by former workers across the UK, including many at the head office in Portsmouth.

They used to be able to retire early, losing 3% of their annual pension for each year before 60, but the new scheme now sees 6% lost each year before 63.

IBM said its changes were legal and it will contest any action.

Under the old scheme if an employee with an annual pension of £40,000 retired at 55 they would sacrifice £6,000 (15%) over the five years before their 60th birthday.

'Extremely bitter'

But under the new scheme the same person would sacrifice £19,200 (48%) over eight years, from their annual pension.

The employees are claiming unfair dismissal and age discrimination.

Their solicitors, Now Legal based in Fareham, Hampshire, claim they were effectively forced to take early retirement to avoid the new terms which would mean losing "substantial proportion" of their future pensions.

The firm added that because the changes impacted on long-serving employees, who are all aged in their 50s, a claim for age discrimination would also be pursued.

Teja Bains, solicitor, said: "Many of the claimants are extremely bitter about the way they have been treated by IBM after so many years of loyal service.

"Many had been with the company for all or most of their working life.

"Being effectively forced into early retirement in their 50s came as a great shock and will have had a very significant financial impact."

All UK claims, which also include independent actions, are being lodged with Southampton Employment Tribunal but could take months to deal with.

IBM, which said it will fight any action, added: "Throughout the process of changes to IBM defined benefit pension plans - and the introduction of a new early retirement programme - IBM has consulted with relevant employees and complied with all legal requirements.

"Claimants left IBM of their own volition, on favourable early retirement terms.

"Thus, we will contest these actions, which are without merit."