The three long-time employees – Joshua Knight, Michael Campbell and Ernest Fabrizio – began participating in IBM's Personal Pension Plan prior to 1999 and selected "various forms of joint and survivor annuities upon retirement," alleges the lawsuit. The IBM Personal Pension Plan, which is worth $25.5 billion in assets for 250,000 participants, calculates benefits as a "single life annuity, meaning a series of monthly benefit payments beginning at retirement and continuing until a participant's death," alleges the lawsuit. However, the default benefit payment for married participants "is a 50% joint and survivor annuity that pays the participant's surviving spouse … 50% of whatever amount the participant received during his lifetime," according to the lawsuit.

Plan participants alleged IBM failed to disclose that participants would receive less than the actuarial equivalent value of their accrued, vested pension benefit it they selected a joint an survivor annuity. Also, the employees alleged that IBM's "Mortality Table is more than 40 years out of date, despite dramatic increases in longevity of the American public."

Related: IBM just flipped the script: Are companies now going to bring back pensions?

IBM, once a leader in the shift away from defined benefit (pension) plans to 401(k) plans in the '80s and '90s, began taking a different approach to retirement plans in 2023 by switching employees to a Retirement Benefit Account. IBM notified employees that it would suspend the 401(k) match an 1% automatic contribution beginning in 2024 and will instead make a monthly account credit toward a new "hybrid pension" plan, consisting partially of a DC plan and partially of a DB plan. Industry commentators compared the plan to a cash balance plan.