Question: In 1999, IBM got into trouble with its employees when the company tried to switch from a defined benefit to a defined contribution (called cash

In 1999, IBM got into trouble with its employees when the company tried to switch from a defined benefit to a defined contribution (called “cash balance”) plan. IBM is just one of many companies that have switched from defined benefit to defined contribution plans. Consider the following questions:

1. Defined contribution plans are much more popular among employees now than they were 30 years ago. Why do you think that is?

2. Why do companies want to switch from a defined benefit to a defined contribution plan?

3. IBM had to revise its plan for switching to a defined contribution plan after it was threatened with an age discrimination lawsuit by its older employees. Why do you think older employees would be opposed to the switch?

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