IBM C-Planners' Web Site

The Situation

Contents

• Background
• Current Situation
• As at January 2001

Background

Over the past few years a considerable surplus has been built up in the C-Plan funds. There are various ways of measuring it but a reasonable estimate is around £700 million (circa June 2000). The Trustees and Company are using it to fully offset Company contributions to the C & M plans. This has enabled the Company to take a contribution holiday.

They have also used the surplus to finance the legally guaranteed pension increases for actives for service after 4/97.

The retirees are therefore the only class of beneficiary not to have received any benefit from the surplus because the discretionary increases they receive (i.e. 70% RPI at intervals of generally more than 12 months ) are already pre-funded.

It would appear that the Trustees have failed to:

1. treat all classes of beneficiary in an equitable manner.
2. make any proposals to the Company to "restore" erosion of pension purchasing power, despite large surplus being available.
3. communicate their responsibility for initiating pension increases, relying instead on a statement that the Company grants the increases (the Company has to give consent but the Trustees should determine the level, based on normal practice etc, and make proposals to the Company).

1. failed in its duty of care to ex-employees by refusing to consider any form of guaranteed increase despite large surplus and retirees past pension contributions.
2. failed to be concerned that it is bottom of the league on pension increases (both on amount and timing ).
3. "persuaded" the Trustees to accept the concept of cross subsidising M Plan company contributions from C Plan surplus.
4. let down those who were "persuaded" to take early retirement on trust that their pension would be adequately protected. This surplus is an ideal opportunity for the purchasing power to be maintained.

Dave(DAT) Reid has provided a more detailed C-Plan/M-Plan Analysis.

Current Situation

Dated: 25 January 2002

In May 2001 a number of complaints were submitted to the Ombudsman's Office. Since then we have been waiting to hear when they will investigated. At this point in time they appear to be waiting for an investigator to be appointed to carry out the work, but there seems to be a backlog within the Ombusman's Office.

For the latest information please see the most recent newsletter which is available on the documents page.

January 2001

John Spencer, a Technical Specialist allocated to us at OPAS, has decided that we have a cause for complaint against the company, the Chairman and the Trustee Directors of the IBM Pension Plan. Our first case (by Mike Cawley) has been forwarded to the Occupational Pensions Ombudsman who is now considering it.

The two key issues before the Ombudsman are:

1. The failure of the Trustees to agree an equitable share of the "surplus" with the Company, in view of the erosion of IBM pensions.
2. The concern arising from the cross subsidy of C Plan assets to the M Plan. The M Plan is quite different in terms of members, contributions, benefits and operating rules.

In addition Dave Mitchell has raised a second set of complaints and these are now being progressed through the Internal Dispute Resolution Procedure (IDRP) with IBM. This procedure has 2 stages each of 2 months. It was thought that these complaints could be combined with the first set, but it now appears that this is not the case.

You may have heard about the High Court decision regarding the Barclays Case. Our situation is not quite the same as Barclays. The Barclays pension scheme was non-contributory by employees, but the IBM C-Plan required that employees contribute 4% of THEIR salary.

We now have a situation in which some members of the C-Plan are currently contributing to a fund, of which the surplus is being used, unknown to them, to fund benefits for others.

Keep tuned to this website for the latest news!

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