Suppose you order a meal in some cafeteria or pub where you pay for the meal at the time you order it.  When the meal arrives it falls well short of your expectations - the meat is too tough to cut or there is a slug on the lettuce.  What should you do?

The least-hassle solution is just to walk away.  Maybe you could get a different free meal, but would you want one from the same source?  Maybe you take a more public spirited line, with more concern for other consumers than for your own loss.  Should you berate the staff you can see?  Or the cook or the manager?  Perhaps you would feel that hygiene standards have been breached and officialdom should be informed.  Or you could get more committed and take to warning customers of your experience when they are ordering.  How about walking up and down outside with a placard reading "Foul Grub Here"?  Would it make a difference to your reaction if you had been attracted to this particular establishment by an advertisement for "Wholesome Appetising Food"?  How would you react if the management said "You were offered a meal and you got one - can't see why you are complaining"?

Without wishing to belittle the problems IBM UK Pension Scheme members are faced with, one can draw an analogy with their situation.  Analogies are not perfect, but the payment before delivery aspect is the same.  The retirees have paid for their pension with work.  The employees have paid for part that way (in their prior working years) and are also committing to the particular company, career, and location. 

For many, delivery has been below what was reasonably expected.  The retirees who believed what they were told in the 1980's (match to leading companies) found the facts were different.  Those who observed the 70% algorithm of the 1990's, and were told the scheme was funded for a lifetime of that, now find less delivered.  Since 1996 the degrading of the IBM UK final salary schemes has accelerated.  Many people thought that the C-Plan funds built up with their contributions could only be used for their benefit.  In fact, they were used for a purpose that could never benefit them.  Employees were told that a final salary scheme was one where the company took the risk that delivering according to the scheme might turn out more expensive than anticipated.  When it actually happened, they found much of the cost shifted to them.  Employees were told that a final salary scheme meant their final years of salary were the determinant of their pension.  Now the young ones find the determinant will be more like 2/3rds of their final salary.  (Would it still be a final salary scheme if that 2/3rds became 1/100th?)

So, just as with the unsatisfactory meal, it is reasonable to consider what to do.

This web page doesn't answer that question because the answer lies with you individually.  It does summarise some suggestions that have been made.  One collection can be found from earlier days when AMIPP categorised messages from the message board.  The most recent messages can be found on the message board.  If your web access is powerful enough to make it practical, all the messages are indexed from the archives and there is a search facility.

Appeal to IBM?

Thirty years ago an employee's first thought would be to use the management chain.  IBM's business model then was to be the best company to work for, hence have the best staff, hence provide the best products and services.  Shortcomings in benefits were seen at all levels of management as a cause for concern and action.

Today's business model is at the opposite extreme.  There is no aim for leading or superior benefits, only an aim to be "competitive".  A full employment policy has been replaced by regarding staff as "supplies" to be sourced from the cheapest source worldwide. The downward trend is in all aspects of working for IBM UK.  In 1971 the internal opinion survey found 90% of Hursley staff rating IBM as above average or better, as a company to work for.  Only 1% regarded it as below average.  What are the figures now?  Some employees have suggested to AMIPP that employee ratings for IBM UK are now the worst IBM ratings for any place, any time.

Few people have suggested that appeal to IBM can be effective.  While immediate and even national managers can empathise, the decisions are made at US headquarters, Armonk.  Armonk executives take from IBM at hundreds of times the rate of a typical employee so they are divorced from understanding employees' financial concerns.  Also the cut-throat world of executive power struggle does not leave room for concerns like the British sense of fair play.

Appeal to the Trust?

There are numerous suggestions that trustees should be asked to do more, along the lines that "the trustees are there for us".  There are signs that the trust these days has moved in part closer to its paramount role of advancing the members' interests.  (As with its belated recognition that full protection against inflation is the norm, rather than 70%, and the increased independence amongst the "independent" trustees.)  However the arrangements continue to have little constraint on IBM control of the outcomes.  We continue to have trustees who are flown in from the US to attend meetings.  For the scheme design changes in 1996 the same IBM manager designed the changes, recommended them to IBM, recommended them to the trustees, and voted for them as a trustee.  The recent scheme changes were negotiated between IBM financial executives and a past financial director of IBM UK, with no other trustee present and only a perfunctory overview of the exchanges recorded.  So the setup doesn't demonstrate "robustness" of trustees in their approach to the company.  (Something which the Pensions Regulator has recommended). 

Overall it does seem that commending trustees when they push in members' favour, complaining when they don't, and electing MEDs with a similar attitude, can have a beneficial effect even if it still leaves the trust doing mostly what Armonk wants.  (And of course it can be argued that such "co-operation" with the company is wise - is it wise to poke a bear with a stick even if it is eating your cabbages?)  

Threaten IBM?

Some correspondents have pointed out that members can damage IBM UK in a way that IBM cares about - revenues.  Some retirees have kept informal contacts with customers.   If customers are made aware that IBM has proved untrustworthy in dealing with scheme members they might see that as reason to doubt IBM's general trustworthiness.

The drawbacks to this is are that further loss to the company's business is not an advantage to scheme members and that the impact would be felt most by national management.  Armonk might merely blame local management.

Threaten the trustees?

This is rarely hinted at because there is almost no threat.  The MEDs can be replaced tri-annually but that would be arbitrary since there is no communication about what they individually did.  The trustees can use the trust's monies to fight legal action and even if they lose they are indemnified against personal loss (in all but freakish circumstances).  (In contrast, there is a threat to those trustees that IBM hires and fires from IBM's disapproval of their behaviour, but that is always an unspoken threat.)

Appeal to MPs?

Scheme members have reacted by writing to their MPs, and AMIPP has written to MPs collectively.  There are impediments.  If the Pensions Ombudsman is not already involved the natural reaction of an MP is to say "the Pensions Ombudsman is there to deal with what are bringing to me".  If the Pensions Ombudsman is already involved their natural reaction is "let's wait for what he says".  So writing to MPs can hopefully lead to better regulations and mechanisms, and any exposure of what IBM has done is a deterrent to other bad things, but involving MPs is not really a route to redress.

There is no downside, which may explain people's willingness to involve their MP.

Appeal to the public?

There is no shortage of suggestions for this - "We should get on the Money program", "We should have letters in all the papers" etc.  The biggest obstacle is that there isn't a human interest story. IBMers have lost out in a series of steps.  (About a percent a year on pension value, an increase of contributions one year, reduction of benefits the next.)   No single event matches the trauma of those in failed companies who found their pension prospects halved overnight.  The principle of an undeserved gap between promise and delivery may be the same for you, but the story value is not. 

As an illustration consider this story:

Tony Magee, 59, started in the South Wales steel industry as a 15-year-old in 1962. He has 34 years' worth of pension scheme membership at Allied Steel & Wire (ASW) and its predecessor company, GKN.

"I was due to get a pension in the region of £1,000 a month on retirement. Now it will be a very small percentage of what I was expecting. The FAS has been very negative about giving any dates or figures and only those within
three years of their retirement date will get anything from it.  "We are kept hanging on and hanging on for any information, but it's really hard - we've lost all heart really.

"My aim was to retire at 58. With my ASW pension and other savings, I would have had a nice lifestyle in retirement. But losing my pension has meant that I have nothing to look forward to but the state pension.

"I saw my mum and dad rely on the state pension, which is totally inappropriate for this day and age, so I was happy in the knowledge that I would not have to rely on the state pension - but that has been ripped away
from me."

Magee has found work at Celsa UK, the Spanish company which took over from ASW, and is back in his old job of working at the steel furnaces.

"I had a heart attack soon after I started work again and I'm sure this contributed.

"Losing a pension you have paid into for over 30 years is a devastating feeling, it never goes from your mind.

"I had been a Labour voter all my life, but I will never support them again and that goes for thousands of others too.

"What this government and Gordon Brown have taken from us, they should give back to us. We can't believe that they've turned their back on us and treated us with such contempt."
 

Get help from the Unions?

Right now, unions are having some successes in defending occupational pensions.  The most dramatic of these concerns the civil service.  Civil servants have good pension schemes.   (Not as good as MPs pension scheme but better than the average over all pension schemes, particularly with respect to early retirement.)  The unions have agreed that the pension schemes for existing public servants should be left almost untouched, rather than reduced in accord with the national trend.  As a taxpayer, one can question whether that is good news but it does show the value of a recognised trade union.

IBM UK doesn't recognise any union.  (The obvious candidate is the Information Technology Professionals Association within Amicus)

The TUC provides support for legal actions.  The case of those who lost pensions through company failure prior to the existence of the Pensions Protection Fund is being taken through the European Court by the TUC.  Whether the TUC would involve itself in the principles of the IBM situation is unknown, but looks like a long shot.

Use the Courts?

This has been suggested but most forum users recognise that finance makes this almost impossible.  There are those who have taken legal action against IBM, and some of them have won.  But trust law is notoriously fuzzy and both IBM and the trust have effectively bottomless pockets.  The potential cost of action is enough to wipe out a typical scheme member, financially.

Use the IDRP and Ombudsman mechanisms?

The IDRP mechanism has more promise than simply interrogating Pension Services because it doesn't allow brush-off and "we don't know" and stalling.  In practice it is little more than a necessary posturing before the Ombudsman can be involved - the trust is unlikely to agree that it has made a significant mistake or to explain fully. So it is the Ombudsman step that achieves most.

We know the limitations of the Ombudsman:

- Class actions are not possible.

- the Ombudsman's Office lacks resources.

- the Ombudsman is an amateur, with no knowledge of pensions law when he took the office.

- mistakes that favour the scheme member can be corrected in the High Court, mistakes that favour trust or company cannot.

Nevertheless there are positives to having the Ombudsman involved.  The existence of the mechanism, in itself, is an encouragement to proper processes in the trust.  An Ombudsman's report, even if it selects facts to fit its conclusions, will contain information that would otherwise not come to light.  (As with the Corporate Instructions which applied US instructions to our UK pensions situation.)

The lack of class action means that the individual using IDRP is critical.  If their circumstances differ from the circumstances of those most damaged then the circumstances of those most damaged will not get considered.

There are disincentives to being the named complainant.  For the employee, confronting IBM will not be a career enhancing move.  Nobody wants to be a Peter Plavchan. Amongst the retirees those disenchanted with IBM are also those liable to think "I'm relieved to have got away from IBM, now I want to forget them".

Even with an appropriate and persistent complainant, it is not enough just to make a common sense complaint.  In theory the Ombudsman can take such a complaint and convert it to an expression of non-compliance with the law but in practice that is a lot to expect.  So a purposeful complainant will need some legal context for complaining.  In our case there are two major opportunities:

A person who used their AVC money to buy extra pension under the "70%" option.  Another web page describes their case.

An employee who doesn't believe the trust should have accepted the view that there was nothing they could do about the recent redesign.  There is no regulation which required the trust to agree - the trust is relying on the opinion of one Q.C. about the implications of previous court decisions.  The Q.C. might have been uninformed or misinformed about the state of IBM's business.  Or he might have just been wrong - it is not uncommon for two Q.C.s to give contradictory opinions.  (IBM US has already paid up because one part of its US pensions schemes was illegal.  One presumes their legal advisers told them it was legal.)  The case lawyers usual cite as conferring power to over-ride the deeds is South West Trains versus Wightman [1998] PLR 113. 

There are differences:

South West Trains [SWT]  was a necessary pensions redesign, following on from privatisation.  The IBM redesign was not necessary.  (IBM has not claimed the prior scheme to be unaffordable.  It is merely too expensive for their taste; they prefer to spend on propping up the share price.  There is no evidence that delivering benefits lower than the norm is a necessary component of company survival - if it were the downward spiral of "competitiveness" would only stop with no pensions and the Minimum Wage for all.)

The SWT agreement benefited the staff. The IBM redesign degrades benefits.

The SWT agreement was negotiated with the Unions.  The IBM redesign is an IBM invention.

The Unions generally, Trustees, and Employer were all in favour of the SWT agreement.  (The complaint was bought by some members who thought their benefits should be increased by more than they were, via their union.  In the postulated IBM case it would be IBM suing the trust because the trust would not carry out the administration to match IBM's plans.)  Nobody but IBM has expressed approval of the IBM redesign.  (Unions are not involved, the Trust regards itself as required to implement what IBM proposes.)

Despite these differences, SWT is regarded by some as a precedent establishing that IBM can present staff with a number of options for benefit degradation and then, when the employee elects the least damaging, insist that the trust implements the employee choice irrespective of the protection in the trust deeds.

This is questionable.

Overall, a wide range of challenges to IBM have been proposed, but there is also some recognition that none are easy and obvious.  Those that rely on shaming IBM are up against the fact that Armonk does not care, and degradation in stages is difficult to bring to public attention.  Those that rely on court action have prohibitive financial risk.  Those that rely on the Ombudsman are relying on the fortitude of some complainant whose personal gain from success will be small compared with the importance to members as a whole.  The Ombudsman mechanism is skewed against the individual.  Approaches through MPs and Unions are long term approaches.

Despite the difficulties AMIPP feels it is right to encourage activities, rather than do nothing.  The most powerful approach will be to open IBM's behaviour to inspection - corporate privilege thrives on secrecy.  AMIPP will continue to maintain and take note of the message board. AMIPP will continue to serve as a vehicle to spread the word, and will relay your opinion to MPs collectively.  What information there will be to spread is more crucially dependent on there being individuals willing to battle.