The Solicitor - The FindLaw UK Life, Family and Workplace Law Blog

Unfair dismissal: IBM employees "forced" to retire early in pension shake-up

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250 former employees of IBM have commenced legal action for and age after the company allegedly "forced" them to retire early or suffer a significant hit in their pensions.

In April, the company closed its final salary pension scheme and fundamentally altered the terms of its early retirement scheme.

Before then, employees could retire early and only lose 3% of their annual pension for each year before their 60th birthday. So, for example, say an employee with an annual pension of £25,000 retired at 55 they would sacrifice £3,750 over five years.

Since April, however, if an employee retires early, they will lose 6% of their annual pension for each year until they turn 63. Applying the above example, an employee with an annual pension of £25,000 who retires at 55 would lose £12,000 over eight years.

Teja Bains, solicitor for the affected employees, 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."

IBM says the changes to the pension scheme were legal, however. A spokesperson said: "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."

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