IBM to Settle Suit Over Pension Disclosure

IBM Corp. agreed Tuesday to pay 300 former employees about $15.5 million to settle a pension dispute over the company’s responsibility to disclose changes in its pension plan.

The case dates to 1990, when the former employees of an IBM plant in Louisville, Ky., took an early-retirement package that expired Dec. 31 of that year. A few weeks later, the world’s largest computer maker adopted a new pension plan that the employees deemed more attractive.

The retirees sued in 1992, saying IBM failed to tell them about the new plan.

“This case had been in the courts for years and we decided it would be prudent to settle on what we thought were reasonable terms,” a company spokeswoman said.

The agreement was approved Monday in U.S. District Court in Lexington, Ky. It follows a ruling by a federal appeals court in January saying the company had responsibility to tell employees about the change under the Employee Retirement Income Security Act, a 1974 law that governs corporate pensions.

The settlement adds fuel to a growing trend, which appears to be expanding pension disclosure requirements on companies.

U.S. labor laws have long required companies to disclose the rules, vesting and benefits of existing plans. However, in a series of cases decided in the last five years, employees have successfully argued that companies not only owe them information about the existing plan, but they also must disclose whether there are pension changes under “serious consideration” that would impact the timing of an employee’s retirement decision.

By and large, these suits were spurred by the massive corporate restructurings of the 1980s and ‘90s, which often were accompanied by early-retirement offers and incentives.

At many companies, the early-retirement incentives got richer as managements became increasingly eager to jettison more employees. Employees who left early in the game often felt cheated when they realized that, had they stayed for a few extra weeks, months or years, they would have retired with substantially more money.

“It used to be almost a game of chance. If you asked just the right question at just the right time, you might get the information you needed to make an informed choice about whether to accept an early- retirement offer or wait to retire later,” said Thomas G. Moukawsher, an attorney who has represented several employees in pension disclosure suits. “Now the courts are acknowledging that, as a pension fiduciary, you can betray someone with silence as much as you can with words.”

The settlement will provide payments ranging from $2,000 to $150,000 per litigant, in a combination of cash and increased pension payments, said attorney Ken Hall, a partner with Middleton & Reutlinger in Louisville.

Times staff writer Kathy M. Kristof contributed to this report.