Encore: Work that matters in the second half of life.

IBM chief executive Sam Palmisano announcing IBM’s “Global Citizen’s Portfolio”

IBM is creating a form of encore career savings accounts to help its employees pay for the education and training they need for the next stage of their working lives, either with the company or not.

The New York Times’ Steve Lohr reports that IBM’s “learning accounts” will be modeled on 401(k) retirement accounts. Workers can contribute up to $1,000 a year into the accounts; IBM will contribute 50 cents for every dollar put in by the employees.

Other organizations have been pushing variations on the idea. The Council for Adult and Experiential Learning (CAEL) has developed model Lifelong Learning Accounts, or LiLAs, that have been tested in Chicago, northeast Indiana and San Francisco. In San Francisco, a pilot program this fall will explore how LiLA’s can support older workers seeking new careers. Nearly half the participants will be over 55, a majority will be minority and/or low-income and each participant will get education and career counseling to establish an individual learning plan. CAEL is also pushing federal legislation to expand the idea.

The Financial Services Forum recently recommended a federal tax change to allow deductibility of education expenses, even when directed toward a new career. Currently, only costs for training for advancement in the same field are deductible.

Some individuals are not waiting for legislative action. They are financing their return to school with after-tax college savings accounts that were intended for younger students. Such 529 accounts (they’re named for the section of the IRS code that created them) allow investments to be withdrawn tax-free as long as the proceeds are spent on higher education. CAEL’s Lifelong Learning Account pilot project in Maine is tied into the state’s 529 account program.

IBM employees seeking encore careers will also get help from two other components of the company’s “Global Citizen’s Portfolio.” The company is expanding its Transition to Teaching initiative to create bridges for IBM employees to take up new careers in government, non-profits, educational institutions and economic development organizations. And a new Global Service Corps will place small groups of IBM employees around the world into partnerships with non-governmental organizations to work on problems such as enhanced economic opportunity and access to education resources.

IBM’s initiative gives the encore career concept the imprimatur of a major corporation, and one that has often been a pioneer in workforce development issues. The Transition to Teaching initiative, for example, which provides support and subsidy for retiring IBM employees to move into public school teaching, is being replicated in California, where more than a dozen companies have joined the EnCorps Teacher Initiative.

IBM’s plan allows employees to decide how and when to spend the money, which is held in an interest-bearing account. Employees can take their accounts with them when they leave IBM. That makes the account a way to transition to an encore career, even if it’s not with IBM.

Rosabeth Moss Kanter, a professor at the Harvard Business School, told the Times that IBM’s creation of an effective partnership to enhance skills and opportunities represents a new “social contract” between a corporation and its workers.
“The significance is that it’s controlled by the individual,” Kanter said. “I’m not aware of any other major corporation doing that, as opposed to programs that are part of some career scheme that the company has in mind.

“This is reinventing how a company develops the social contract with its workers in a highly mobile, global economy.”