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Dear Mr Newman Pension Plan 1998 Report I note from the above report that IBM are utilising current valuations of the assets in the fund to avoid contributing to the Defined Benefit and Contribution Plans. Already IBM Pension Fund Trustees attitude toward payments to pensioners compares unfavourably with other similar funds. For example my wife’s Chemical Bank fund has a contract to either keep pace with inflation or pay 5%, whichever is the lower. In fact a discretionary 5% has been, and is, the norm. I am also aware that the British Rail fund ensures that its pensioners benefit from surpluses by means of bonus payments. Despite an outward appearance of retiree consultation, key decisions on IBM contributions and payments to pensioners are taken without the issues, involving very substantial sums, being openly accounted for to those most directly affected. It is time the Trustees reported on these decisions to an annual meeting of pensioners. When a highly regarded and experienced Trustee of the calibre of Barry Morley feels it necessary to resign, it is indefensible that your reporting of it should not have been dealt with more openly. As a result I and many others now have considerably less confidence in the management of the fund. May we now have a full and proper explanation of the circumstances surrounding this unprecedented resignation, preferably to a meeting of pensioners ? The benefits of the contribution holidays accrue directly to the IBM bottom line, assisting the company in meeting pension liabilities to its current employees. Such actions are discriminatory. In similar circumstances other groups of pensioners have formed action groups to successfully protect their interests against corporate “raiding” and financial engineering. IBM can justifiably claim to have set many of the now accepted standards in employee relations. It is unacceptable that our Pensions Trust should not meet similar fair and open standards in its dealings with the retirees. Yours sincerely R Riseley
Dear Mr Riseley, Thank you for your letter of 15 September relating to the 1998 Pension Plan Report. Please accept my apologies for the late response on my behalf. You raise a number of matters in your letter. Some of them, for instance the overall competitiveness of the IBM scheme, are matters for the Company rather than the Trustee and therefore I am unable to comment on them. The Trustee's role is to implement the rules of the plan as laid out in the formal Trust Deed & Rules (TD&R) and it's ability unilaterally to change the rules regarding any individual matter is severely restricted. A copy of the TD&R is available to you, or any other member, for a small charge. I think it would be wrong of me to comment in anyway regarding the resignation of Mr Morley. The communication I sent out to all members at the time was designed to be as fair and balanced as possible to all the parties involved. I am not sure that an annual meeting would be helpful. Various communication channels to both the Trustee & Company exist for all members. In addition, you will be aware that every 3 years elections are held to appoint 4 Member Elected Directors to serve on the Trustee Board until the next election. The next elections are imminent, and you will shortly be receiving an update on this subject. The point you make about the Company's contribution holiday has been discussed at some length by the Trustee on a number of occasions. This has included obtaining three separate legal opinions. The Trustee is satisfied that it has correctly discharged its duties under powers granted to it by the TD&R in relation to this matter. I am sorry that you feel that you need to make some of the comments that you have. I can assure you that your fund is in good hands. The 12 Trustee Directors discharge their duties in a serious and professional manner taking appropriate external advice from the legal and actuarial advisers as necessary. In addition, the assets of the fund are held entirely separate from the Company. If after having read my letter, you still feel aggrieved, I would be very happy to talk to you about any of the above - or any other - subjects via the phone. There is also a formal Internal Disputes Procedure which you may care to follow if you wish. I have enclosed a copy for your information. Yours sincerely,
David Newman
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