More companies are opting to minimize or freeze their traditional pension plans, shifting the risk for saving for retirement onto workers. IBM Corp. announced last week that it will freeze its pensions. Experts think that the move by this large, profitable employer will make it easier for others to follow suit. In IBM’s case, the freeze will not affect current retirees but about 120,000 active employees will no longer earn additional benefits after 2007. Instead, the employees will receive larger payments in their 401(k) accounts. IBM expects to save as much as $3 billion through the year 2010 with the new program. IBM’s move has drawn criticism from union leaders and employee rights groups.

Two-thirds of the nation’s Fortune 1000 companies still offer traditional pensions. However, the number of employees who are covered under these plans continues to shrink. Freezes are becoming increasingly common. Companies can opt to close a plan to new hires like IBM did, or opt to freeze the entire plan for all covered employees, who get only the benefits accrued so far, like Motorola Inc. and Aon Corp. did.

Overall, about one in ten companies froze pension plans in 2003. Most of these companies were small employers with plans covering fewer than 100 participants. James Klein, president of the American Benefits Council predicts that the private pension system in America will continue to dramatically shrink.