Dear Pensioner,

This letter comes to you from the Elected Trustees of the Pension Fund. We would have preferred it to have been from the full Board of trustees, but IBM's appointed trustees would not agree to the wording. They apparently support the sentiments expressed, but did not want you to know the full facts of the situation.

Last year the trustees of the IBM SA Pension Fund granted all pensioners a full CPI "catchup" increase to pensions, back-dated to 1995, and agreed on a minimum pension equal to the State Pension. A CPI "catchup" is the term used to bring all pensions up to where they would have been if they had been given every year since the last catchup in 1995. The increase is worth about an additional 15% on your current pension. A minimum pension represents an amount of about R540 per month, which would affect about 10% of our pensioners.

In addition to the above improvements in benefits, the trustees agreed on a full CPI increase, effective 1 January 2001. This increase means a further 6.8% on to your pension. These measures have been negotiated on the Board for the last 18 months and would have gone a long way in alleviating the critical cost of living crisis in which most of our pensioners find themselves. Many of you would agree with us that, in order to maintain the purchasing power of our pensions, we would need about 12-17% increase every year.

Regrettably, though not unexpectedly, IBM SA, who, according to the Rules of the Fund have to consent to all decisions of the Board, disallowed all three of the above benefits. No reasons were given for rejecting the CPI catchup. They said that the minimum pension was under review. On the January 2001 CPI increase, they declined the 6.8% granted by the Board and stated that they would allow only 4.566%, which is 2/3rds of the amount granted by the Board. This alteration of a decision agreed by the full Board is most irregular and is not provided for in the Rules of the Fund, and will be addressed by us at the next trustee meeting on February 8 .

As the notification of the increase was received by the Fund only 2 weeks ago, it would not have been in your January pension payment anyway. We hope it will be included in your February pension. We continue to address the problem of IBM's interference in the operation of our Fund, their refusal to allow reasonable benefit improvements to members, their failure to make contributions and payments into the Fund as required by the Rules and their persistent attempts to remove assets of the Fund which do not belong to it. The founders of our Fund, who include Morris Cowley and Jack Clarke have over the years repeatedly assured us that the Fund's sole purpose is to provide pensions to IBMers, to maintain the purchasing power of the pensions, and that the assets could not be used for any other purpose.

We intend to keep you well informed on all actions being taken on Fund matters. For more information about the Fund, see our Website at

We are all available to discuss Fund matters.

Regards, Bruno Ganter, Rudi Goldschmidt, Ian Murdoch, Roger Hull and Olev Taim