IBM UK loses cost-cutting pensions court battle

Vendor unfairly changed pension plans to claw back £890m in costs, judge rules

IBM UK has vowed to appeal a court ruling which states it unfairly overhauled its pension scheme in a bid to save millions of pounds at the height of the financial crisis.

In 2009, IBM launched "Project Waltz" – an initiative designed to cut pension and retirement benefits for 5,000 staff – in order to reduce a deficit of £890m, Bloomberg reports.

The court ruling states the financial crisis was behind the cost-saving measure.

"The market collapse that occurred during the 2008 global financial crisis (and, in particular, the collapse in asset values) was projected to have a dramatic effect on pension costs... which, in turn, had an adverse effect on the projected 2010 EPS [earnings per share]," it stated.

"As a result, all areas of the IBM business (not just its retirement plans) were required to take steps to achieve the level of savings set out in the 2010 EPS road map notwithstanding the financial crisis."

IBM has swung the axe on swathes of its global staff over the past year, sparking outrage and calls from some employee groups for chief executive Ginni Rometty to stand down.

Big Blue strongly opposed the latest pensions ruling and said in a statement that it would appeal the decision.

"IBM respectfully, but fundamentally, disagrees with the court's decision," it said.

"The court's opinion acknowledges IBM's right to make changes in its UK pension programmes, but we believe the court applied an incorrect legal standard in invalidating IBM's exercise of that right.

"IBM fully intends to seek leave to appeal at the appropriate time, and remains committed to providing its employees and retirees compensation that is competitive and in line with market conditions."