I have since listened to the entire show via the mp3 file. It was very interesting to me to listen to all of the dialog. I would personally like to see the event repeated with a different set of players to hear other view points. I believe that with some advance notice, we could get hundreds of IBMers to dial in.

Philby III

It seems to me that the 401(k) system is intent on turning all workers into petit bourgeois that will have them manage their own investment portfolios. If they place their money in different mutual funds, this pits workers against workers since it now is in their interest to see companies they have invested in reduce labour costs to jack up the stock price.

In IBM’s case, their stated motivation for freezing their employee pension plan was that they could not be competitive in the market with companies that did not have pension plan obligations. Robert echoed this motivation in general as a reason for US corporations moving away from defined benefit pensions – that the move was to reduce or get rid of costs.

Where this may be true of some corporations, this is certainly not the case for IBM. In fact, quite the reverse is true.

The IBM plan, comprised of a fund totaling some 48 billion dollars, is over-funded, and has been so quite frequently in past decades. Which means the fund has more than the necessary funds to meet the costs associated with the pension obligations. Unlike other corporations that are suffering due to having to make up for pension fund shortfalls, IBM has made a habit of occasionally pulling off funds from the pension bucket to report as revenue in quarterly reports. This is entirely legal, and I will leave the argument as to if this *should* be legal to someone else.

But the point is that in IBM’s case, the pension fund excesses have functioned frequently as a magic hat from which the corporation can produce profits on the quarterly statement in an otherwise lackluster quarter. The pension fund is not a cost center as the statements would lead you to believe, but a profit center, which can be periodically used to bolster profits when needed.

In this sense, the existence of the pension fund does not make the company financials more volatile, another statement of motivation for the change, but can in fact level out the company financials and in fact make them more stable from quarter to quarter.

The company has done this many times, to the tune of billions – yes billions – of dollars, according to people who know a lot more about it than I do. Accounting and reporting of such disbursements are somtimes quite confusing, possibly deliberately so. New standards coming from the FASB will require the pension plans and the accounting of their funds to be on the company’s balance sheets, and will be required to be included in the company’s bottom line. This, I believe, is where the volatility will occur – not currently, but after the pension fund financials are exposed to the full light of public scrutiny.

So, IMHO, the stated reasons for IBM’s freezing of the pension plan – to cut costs and to make the company financials less volatile – are red herrings. I submit instead that it is quite tempting for executive management to find ways to take part or all of that 48 billion dollar bucket of money, in any way possible, before they are required to publish pension fund particulars as a part of their bottom line according to the new FASB accounting rules.

The announcement states that they expect to save three billion over the next ten years. That has to come from somewhere, and where it is coming from is the pension obligations for current workers. In short, it will come out of my pocket when I retire. Interesting that there was no change to the executive pension fund, which is handled separately. Apparently the market pressures are not so severe that they should impact their expected retirements, too.

We actually had a minor problem last night and our phones weren’t working for the first 20 minutes, so if you called then you would have gotten the “we’re not live” message.” I’m not sure why you got that later in the hour, since our lines were up and working. The mysteries of the phone. The blog’s always open!

As far as calling in…we do have a voice mail message that calls are directed to if you call that number any other time than during the show. I’m surprised to hear that you got the message during the show though, since we were receiving calls last night. My guess is that you would get a busy signal if you called and all the lines were busy, but i suppose that’s the most likely explanation. Sorry you had trouble getting through.

I listened to another great show last night, great guests– especially Robert Reich and Janet Krueger. When I looked at the topic and the news stories the first thing I thought of is this is one more notch in the story about the rich getting richer and the poor getting poorer.

Workers of the world unite!

I think employees need to wake up from their peaceful slumber and to be demand more cash from the get-go, now especially, nothing deferred, to compensate for the loss of benefits. They need to be made whole from the beginning onward if they are to be weaned, to grow up, so to speak. And they need to become more savvy about saving and investing.

Someow those unable to deal with this level of complexity need honest help as well.

Morbius has it all right. Corporations are shooting themselves in the foot. It’s like they, the executives, don’t know whose shoulders, whose sweat, whose creativity, they are standing on and reaping from.

The sooner workers wake up to this the better. it’s the same old story: Sixteen Tons.

Is there some place I can go to hear a recording of the show? I regret not being able to hear it live but have read that the show was very well attended and lively.

Philby III