The Association of Members of IBM UK Pensions Plans (AMIPP)
This page refreshed 22nd December 2015
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22nd December 2015 Current or Recent IBM(UK) Court Cases

It might be useful, and of interest to AMIPP followers, to have summarised here, current and recent courts cases in which IBM has figured (thanks to their behaviour with respect to pensions practice). If you would like to read the comments and follow the discussion arising from these cases go to our forum here - AMIPP forum - There are, as of 2015, two cases in progress and one recent case which has been decided.

The Remedies Judgement (arising from the Good Faith Case - see below) (HC10C01796) - Status = Gone to Appeal

The Remedies Judgement was handed down in the High Court on 20th February 2015. The Remedies Judgement was a series of directions to IBM to put right the wrongs it had done in Project Waltz and the change in the Early Retirement Policy which accompanied it. It was the follow on to the outcome of the "Good Faith" hearing (see below), which IBM effectively lost. The Remedies handed down by the court in this latest judgement stated, amongst other things, that many former employees and some current employees, with caveats, had a "claim" against IBM for damages and other employees did not. A link to the full judgement is here The onus is on the affected employees and former employees to pursue these claims themselves, some of whom are already doing so via the Employement Tribunal (see below). Others who have not already instigated actions but would like to know their options should take legal advice. There was a follow on hearing at the High Court on 2nd March 2014 where the judge approved a "Consequential Issues" hearing for the 27th April 2015 where those parts of his Remedies judgement that the various parties felt needed clarifying would be examined and ruled upon. A separate hearing took place on 8th June 2015 when the judge heard arguments from both sides with regards to appeals in respect of his judgements and he eventually decided to give leave for an appeal. In the meantime IBM has been given permission to hold off rolling back Project Waltz changes; for now. It would appear that this issue (Good Faith and subsequent decisions around it) still has a long way to go, a hearing date for the appeal has not yet been set but is expected to be in 2016. If so, judgement could be late 2016 or even 2017. Although IBM has told the Pensions Trust that it would not instigate any further appeals, they are not bound by that decision. It is unlikely that the Employment Tribunal can definitively rule on anything until this process is complete. Watch this space!

The Good Faith Case (HC10C01796) - Status = Ongoing

This is essentially a claim that IBM did not act in good faith towards its employees when it ended the C & N Plan pensions. The claim was that IBM led C & N Plan members to believe that by accepting changes in 2006 the plans would continue until at least 2014, and then to 2017. During the course of the trial it became apparent to the judge that not only did this claim have merit but also IBM simply went through the motions during the consultation period and that the outcome had already been pre-determined in Armonk. In the ruling the judge found that IBM had failed in its "imperial" duties towards its employees. Imperial Duty means acting in a reasonable way towards its employees so as to maintain their trust and confidence which applies to all employment contracts. However in the judgement, handed down on 4th April 2014 and which can be found here the judge did not suggest any remedies but indicated that it or they should be the subject of a further hearing which took place in July. The judgement for that hearing was handed down early in 2015, see above.

The Employment Tribunal Cases - Status = Ongoing

There are nearly 300 claimants pursuing unfair dismissal and age discrimination claims through the Tribunal. Amongst other things, the claim is that the ERW was constructed to reduce headcount and avoid redundancy costs and if the claimants had not accepted the ERW they would have incurred serious financial penalties further down the road when taking early retirement or being forced to leave by some other means; therefore they are claiming the ERW, and in some cases all of Project Waltz, was effectively a dismissal. The age discrimination aspect arises because the ERW was only capable of being accepted by, and therefore only affected, older employees.
Although each case is seperate and has its own case number they have all been grouped together for the purpose of efficiently hearing them in court. Consequently they are all proceeding at the same pace, which is very, very slowly, since back in December 2010 it was agreed by all claimants, bar one, that proceedings should be suspended (stayed) pending the outcome of the two High Court cases above. The Good Faith case (and now its appeal) has taken much longer than originally envisaged. There was a hearing on 29th May 2014 to hear an application by Now Legal (representing the majority of claimants) to lift the stay. IBM resisted lifting the stay but the claimants won a technical victory. The word technical is used because although the stay was lifted, it was solely for the purpose of eliciting further information, by IBM, from the unrepresented claimants.

UPDATE: 22nd Decemeber 2015. The latest hearing took place on 19th May 2015 and it is reported that the Judge accepted that the full hearing could not take place until the High Court cases, including appeals, were concluded. However he also said that he was keen that any preliminary work, which could be done in the interim, should go ahead. Therefore he ordered that "discovery" (where one or both sides declare what relevant documentation they have in their possession) should take place by 31st December 2015. Following requests by Now legal and the Respondent that date has moved to 12th February 2016. The Respondent (IBM) also made an application for a preliminary hearing to have the age discrimination claims struck out i.e. summarily ruled against. The Tribunal refused this request... To be continued.


The 1983 Rectification Case (HC11C02799) - Status = Complete

This case resulted from IBM's attempt to use the Early Retirement carrot to "encourage" those close to pensionable age to leave the company. During Project Waltz the opportunity to reduce head count at zero cost was seized upon. IBM asserted that they would no longer consent to early retirement and would impose severe financial penalties on anyone retiring or leaving without their consent. They then "generously" offered those who were elegible, and wanted to take early retiremnt, their consent, a one time offer to allow early retirement without the new financial penalties being applied, providing they "retired" at a time of IBM's choosing (almost immediately for most). In the run up to the Early Retirement Window (ERW), the only opportunity for anyone to take their offer, IBM were informed that their actions were probably unlawful. IBM accepted this for a certain class of employee i.e. those who transferred from the N Plan to the C Plan right from the outset in 1983. Then, after the ERW, they generously extended this to those who had transferred later on in 1983. Too late for some. The court proceedings began in 2012 and during those proceedings IBM conceded that all employees who were employed before 1997 when the C Plan closed and were still with the company had the right to retire early without consent (again too late for all those who had relied on IBM's earlier assertions and had left in the ERW). The full judgement was handed down in October 2012 and can be read here.
The Judge ordered the Trust Deeds to be rectified to reflect the right of all C Plan members the right to retire between 60 and 63 without the imposition of the financial penalties IBM had sought to impose. This right was not extended to deferred members.

Admin1

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13 January 2014 The AMIPP Forum lives on

Thanks to a  volunteer who has stepped forward to take over as admin1 the AMIPP Forum lives on and the plan to freeze the forum at the end of March 2014 is now cancelled.
Over the last two weeks the volunteer has worked hard with me so that the handover could take place effectively.
I am confident that he has demonstrated that he is very competent to be admin1 and at this time like admin2 he wishes to remain anonymous.
(I will remain in the backgroud as admin3 for a short period.)
Welcome aboard new admin1.
Signing off.
Old admin1
Mike Eacott

Outgoing AMIPP Honorary Secretary and Webmaster
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Please visit the AMIPP forum , http://www.amipp.org.uk/phorum5/index.html .

There is no one left from the original AMIPP steering group to create new items to publish on this page.
If any UK IBMer or ex-IBMer has a comprehensive and relevant item that it would be appropriate to publish on the website front page, please contact AMIPP admin1 via the  AMIPP forum

14 Dec 2013 Now something from the AMIPP forum:
Re: IBM under pressure elsewhere
Posted by: itsnotthe companyIjoined (host86-130-208-22.range86-130.btcentralplus.com)
Date: 14 December 2013 03:45PM

Another one for Ginny to worry about!


IBM Shareholder Sues Over Cooperation With NSA Spy Program Businessweek
[www.businessweek.com]
The Louisiana Sheriffs' Pension and Relief Fund, in a complaint filed yesterday in Manhattan federal court, accuses IBM of defrauding investors by concealing ...


Shareholder sues IBM, claiming cooperation with NSA spy program WRAL Tech Wire
[wraltechwire.com]
The Louisiana Sheriffs' Pension and Relief Fund, in a complaint filed Thursday in Manhattan federal court, accuses IBM of defrauding investors by concealing ...


IBM Shareholder Sues Company Over NSA Cooperation Businessweek
[www.businessweek.com]
In a complaint filed in federal district court in Manhattan Thursday, the Louisiana Sheriffs' Pension and Relief Fund claims IBM defrauded investors by allegedly ...


Lawsuit accuses IBM of collaborating with NSA and hurting business ... Computing
[www.computing.co.uk]
The Louisiana Sheriffs' Pension and Relief Fund filed a lawsuit in which it accuses IBM of actions that have resulted in its market value dropping by more than ...

11 Oct 2013: Forced Ranking in Performance Management
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See publication from Unite the Union here

  March 2013: A webmail was received on 23 March 2013. The following contains a copy of the content of its subject and body:

Subject of email:

The IBM "1983" case is now finalised, and a Consent Order was filed dated 07 Feb

Body of email:

See this page on the website of the IBM UK Pensions Trustee:-  http://www.smartpensionsuk.co.uk/index.php/139/1155/c-plan-judgment-february-2013 .
Perhaps you should update the AMIPP site to reflect this?
In the meantime, it is understood that the other multi-week "good faith" IBM C Plan pensions litigation case is now also being heard before Mr Justice Warren in the High Court.
See e.g.:   http://www.bloomberg.com/news/2013-02-18/ibm-u-k-staff-say-change-to-cover-pension-deficit-unfair.html .

End of body of email.

There is a thread here on the AMIPP forum started on 12 February that may be of interest to people who do not visit the Forum regularly.
There is also a thread here on the AMIPP forum started 15 February about the "good faith" case referred to above.

AMIPP admin1


The judgement on the "rectification" case was handed down on Friday, 12/10/2012.


"Rectification" is a big deal. There are plenty of instances where an employee or pensioner has had their complaint rejected on the basis that the Trust Deeds are a legal document and thus prevail, however many assurances and documents the scheme member can produce that promise something better. Rectification says the Trust Deeds were wrong and need change.

We are fortunate that Justice Warren was willing to go back 30 years. (In contrast, when our members complained about something via the Ombudsman he would not go back ten years on some issues. [Ombudsman file K00516 para 13.] )

The Trustee has been quick to put an account of the verdict on their website, and include a link to the actual document. This is better communication than we have seen previously. Whatever interpretations of the verdict you encounter, you can check for yourself by reading the verdict.

The good news is that the deeds will now say that active members of the C Plan can retire from age 60 without the need to get Company consent and that their pension will be unreduced. Of course, there are no active members of the C-Plan now but the Trustee expects the rule to carry over to those who are deferred members by reason of the 2006-2009 plan changes. (But not to deferreds in general).

Justice Warren implies that IBM would get permission to appeal - he discusses how an appeal court might view his verdict. However, IBM will find it hard to succeed at appeal - the case hinges on what was intended in 1983 and Justice Warren has made findings of fact about that, which will be hard to shift.

The Trustee lost on extending the "unreduced pension" back to age 60 for all deferreds. But this is not a great loss. There are special rules for special cases, such as someone with a very short life expectancy. For the typical deferred, it won't be a big financial deal to wait until age 63 for an unreduced pension since the pension will be upgraded noticeably (by regulation) during the wait.

There is no win or lose for those retiring before age 60. The case never questioned that that requires company consent. (It is a separate question whether they would have chosen to retire when they did if the deeds had been corrected earlier.)

Justice Warren was careful to isolate this case from the "trust and confidence" case, aka "bad faith" case he will hear next year. But the rectification does introduce new concerns. IBM knew in 2009 that what employees were being told, and had been told in 2006, was subject to challenge. Were they right to press on with implementation? Was the Trustee, strongly convinced the deal being presented was a misrepresentation of the situation that has emerged, right to not seek an injunction preventing implementation?

Justice Warren gripes about not getting the co-operation from Armonk that he would have liked. This is relevant to the "bad faith" case, where there are those who believe the case will be decided by what can be extracted from Armonk about the real motives behind IBM's activities.

From the judgement, it seems that David Newman and the various experts involved did an excellent job of gathering and presenting the data and opinions from long ago. That is a reason to expect the "bad faith" case to also be well presented.

Tenth Anniversary of La Hulpe closure.  We have received this announcement:

 IBM Arthur K Watson International Education Center (IEC) La Hulpe, after almost 30 years of first class education, training, seminars and conferences, closed its Belgium La Hulpe facilities on 30 September 2002 for good. The operations were relocated to IBM Belgium Headquarters in Brussels (Diegem Zaventem Airport Vicinity). This event - on the tenth anniversary of IBM Arthur K Watson IEC La Hulpe closure - will bring together Staff, Assignees, Students and all, who one way or another were connected to this beautiful IBM location, for a grand reunion, to reminisce the good old days, get updated about each other, celebrate IBM's 100th anniversary and have fun. This will be a unique event, since it will be held in the same location where IBM IEC existed and which has now been transformed to a superb Hotel, SPA and Conference Center. For further detail, write to Varoozh Harikian at: LearningOfficer@aol.com     

Some information is now available on how the issues narrowed during the High Court case.  This shows some agreement that the deeds need correction to reflect what the Company and the Trust intended in the 1980's,  but exactly what correction will not be known for months.   27 July 2012

The Annual Reports for the Main Plan and the I-Plan, covering calendar year 2011, are now on the Trust website.  These are the first full documents we have seen from the chairmanship of Bob Bridges and the smaller set of trustees.  There is a welcome increase in information, in comparison with some previous Accounts.  Of particular interest:

There will be Valuations for calendar year 2011.  Valuations are part of the mechanism that regulates DB pension funds.  The valuation uses figures from the accounts, data about the scheme members, and an algorithm provided by the trustees, to calculate the "technical provisions" - a measure of the funding adequacy.  The worst a trust can do is a valuation every three years; ours have been on the 2003, 2006, 2009 cycle.

A trust can choose to have a valuation before the regulated last minute.  In 2009, when the 2008 valuation might have been calculated, the credit crunch had already precipitated the worst economic change of our lifetimes.  Yet our Trustee decided against having a 2008 valuation.  Now the Annual Report shows the Trustee doing what should have been done in 2008 -  there will be a 2011 valuation.

Because of the slowness in agreeing parameters for the calculation, and within the actuarial activities, it takes around a year to perform a valuation, so we won't have those answers for some months.  Meanwhile the accounts have some interim guesses - 750m deficit for the Main Plan and  300m deficit for the I-Plan. The words about the Main Plan figure say the 750m is "under the same basis as the technical assumptions applied in the preparation of the Actuarial Valuation Report completed on 29th March 2011" (which was the 2009 valuation).  These words are missing from the I-Plan Accounts so we can deduce the 300m is based on assumptions not disclosed to us, so it is largely meaningless.

While on the topic of deficits, it is worth repeating that the agreed payments from the Company into the fund are not based on the prudent assumptions used in calculating deficits.  They are based on more optimistic rates of return which are in the Statement of Funding Principles. So the payments into the fund will be inadequate to achieve the planned recovery if the prudent rates (or worse) materialise.

The balance of the fund's investment activities changed during 2011.  The figures to ponder on are:

Investment Assets: DB Section: Derivatives: Forward Foreign Exchange Contracts (OTC)   2010  596.5m  versus  2011  2.524.7m

One way to read this is to say that 2b of our 8b of assets has been moved into currency speculation.  As the accounts say "The nominal value of the futures contract is subject to market movements and is the economic exposure".

The accountants' way of putting it is "Forward currency contracts are used to partially hedge currency exposure arising out of holding non-sterling denominated assets".

Wikipedia can help with "forward contract" and "currency overlay" but if anybody can readily explain why this is the right time for this massive jump,  please tell us on the forum.   27 July 2012

"Webinar" is jargon for a seminar that was originally broadcast on the web.  The Pensions Regulator has published a webinar on its recent work.  After the waffle from the first presenter you reach some information presented by actuaries working for the Regulator.  These actuaries are better placed than the typical actuary commissioned to advise a particular trust or firm because they are not exposed to the "shoot the messenger" effect that they might lose their commission if their advice was unpalatable.  That possibility is exacerbated when the same firm provides both investment advice and actuarial advice - forthright current actuarial advice might be seen as indicating that prior investment advice was bad.   (Since 2002 our trust has had a policy of taking both actuarial and investment advice from the same firm.)

There are plenty of facts for those who like numbers.  (The schemes considered got less contributed to their funds from the employers than they gained from the pensioners who (without choice) gave up future RPI increases).  There is also some refreshingly plain talk - "The failed equity bet".

There is a Q&A session but nobody asked the embarrassing question for the Regulator - "The funding position is better in Holland than in the UK. How much of that is due to better regulation?"  

Newsletter 49  15 June 2012

This website is about occupational pensions, and especially about IBM UK pensions practice.   Occupational pensions tend to have a long period when the employee is buying the pension with work and contributions, followed by a long period of pension in payment after retirement.  Over such a long period there will be changes in the behaviour of the company.   In some cases this is cause for outrage, when the members of a pension scheme (the consumers) feel they have been wronged by the employer (the provider).  A question of consumer protection arises - whether a company can do and say whatever it likes when it wants to recruit, retain or retire employees and then do something different subsequently.

IBM UK is an extreme case.  For decades it obtained a talented, loyal, ununionised workforce by a practice of being competitive with leading companies in all of its benefits.  In answering a question about pensions in payment (PIP), ie how the value of pensions is affected by inflation, IBM confirmed and documented that for PIP, like all the other benefits, it aimed to be competitive with leading companies.  This was only an "aim" because IBM's economic circumstances might have prevented it.  Another document explains the constraint of affordability.  

IBM's PIP practice has been the worst of all comparable companies.  It turns out that this is not due to affordability, but to a mechanical rule for degrading the value of pensions, irrespective of economic conditions or what other companies did.   This transition from "One of the Best", in practice and predicted, to actually "One of the Worst" took place after many people had retired.   In the midst of this, an  extreme action of totally changing the nature of the pension plans was made, perhaps illegally, without as much as advising the scheme members about how it would be funded. The manner in which these changes were put through the Pension Trust board, with U.S. headquarters monitoring that U.K. board and appointing U.S. executives to it, so that the changes reflected U.S. requirements rather than English notions of "fair play", was exceptional.

As consumers of occupational pensions, with no power to bargain after retirement, is there anything the retirees can do? Is there any legal constraint, on what happened or on how the pensions trust was used to make it happen?

If you are concerned, you are not alone.  More than 3000 people receive our electronic newsletter.  Some have been looking into the affair for years, as our situation report explains.  Dozens wrote to their MP, dozens wrote the authorities and agreed that a small set of complaints, taken together, would cover their concerns.  This website records a thousand messages offering information, advice, and comment about what should be done.  A media campaign? Change the law? Hire a lawyer? Petition the elected trustees? Enlist the help of pensioners' associations nationwide? Join a union? The pros and cons are discussed.

If you are an active member of a pension plan you may also be concerned - your bargaining power, to take your skills to a different company, represents a last resort.  If you have a deferred pension, it may be large enough to matter to you.  Even if your interest is only a general one, we suggest you bookmark this website - our notes explain how to find what is new on each visit.  We suggest you register for the newsletter which usually comes out at six week intervals.  If you are new to this site, you can read about our general situation now.   This home page cannot describe everything that is on the website, but the links on the top left will help you find things, and submit your opinions, and read others

This site is maintained by the Association of Members of IBM UK Pension Plans.

You are welcome to provide material for this site (for example, any correspondence, reference material, background, legal items etc.). Please send any input to the Webmaster

There are some notes about the site, with the usual disclaimers, and navigation advice.

 

Eat and drink pleasantly for what you did beforehand in the days gone by. [Qur'an 69.24]