IBM Employees' Pension Slashed, Yours Could Be Next

Thousands of IBM employees have worked 20 years building their pensions. Now, they have been slashed, and the pension you spend your years working on could be next.

The issue has inspired a union campaign, a potential lawsuit and even the possibility of Congress getting involved.

"The new plan basically cuts my retirement 42 percent," said Kevin Stalnaker.

Stalnaker, 43, said he does not deserve this after 20 years at IBM. He is too young to stay in the company's old pension plan and too old to take advantage of Big Blue's new cash balance plan.

"I'm not alone in this. There are thousands of IBMers that have said 'This is morally reprehensible what you're doing to us,'" said Stalnaker.

The new cash balance plan helps attract younger employees. It grows steadily over time and can be withdrawn even if the person leaves before retirement.

IBM's traditional pension barely grows at all until ballooning the last five to 10 years on the job.

"Now that we're at the place where our retirement is really going to be building up, you've cut the rug out from under us," said Stalnaker.

IBM says this move will help recruit new employees while, at the same time, freeing up money to give older workers higher wages and stock options.

"We're not taking money away from the total compensation package. We're redirecting it," said John Lucy, IBM spokesman.

Financial planner Ben Micham says there is not much you can do if your company changes its pension plan.

He explains, you can take matters into your own hands by setting up your own retirement fund.

"Anybody can start out by calling a mutual fund, calling their adviser and get $50 a month put away. Keep doing that. Don't stop," said Micham.

"It's a dog eat dog world, and you've got to rely on yourself and your family. You have to plan for your future. Don't rely on corporate America to do it for you," said Stalnaker.

If you want to set up your own retirement fund, one of your best resources is the library.

You can get the phone numbers of a lot of mutual fund families from a variety of financial magazines and reference books.

Financial planners say it is often better to start off with mutual funds than going straight to stocks.