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When IBM announced that it was reopening its defined-benefit plan, many wondered if pensions in general were making a comeback. But after taking a closer look at IBM's policy, researchers say the revolution isn't coming.
"That is just not the story," said Alicia Munnell, director of the Center for Retirement Research (CRR) at Boston College. "I think this really is a financial maneuver much more than a change in design of how benefits are provided."
Behind IBM's decision
It's no wonder IBM's decision drew attention. In November 2023, the tech giant declared it was not only bringing back its pension plan — which had been frozen since 2008 — but was ending its 5% contribution match to its 401(k), starting in 2024.
The move seemed to fly in the face of a four-decade trend. Since the 1980s, American employers have been steadily shifting their retirement benefits from defined-benefit plans, like pensions, to defined-contribution plans, like 401(k)s.
Research has shown that retirees with 401(k)s, which leave disbursement decisions up to the user, tend to spend down their savings much faster than those with pensions, which guarantee a fixed income. So when IBM made its announcement, some retirement experts were cautiously hopeful that other companies would follow its lead.
READ MORE: What the end of IBM's 401(k) match could mean for the future of retirement plans
"I think...