The Association of Members of
IBM UK Pension Plans (AMIPP)

This page created 20 Jan 2001

Frequently Asked Questions
 

These Questions and Answers are constructed to be representative of the hundreds of real questions which have been appeared on this website See the rest of the site for detail and background to the answers given here. (This FAQ is overdue for an update but several of the answers are still relevant.)

Contents

  1. What is IBM?
  2. What is the C-plan?
  3. What is this billion dollars about?
  4. Don't we elect trustees to watch out for that sort of thing?
  5. Why didn't I know about all this?
  6. Why have I not heard through my local IBM Club?
  7. Couldn't the elected trustees have just told us what was going on?
  8. Don't the trust deeds protect us?
  9. Aren't there regulations that stop companies taking money from funds?
  10. Has IBM taken the money?
  11. How has IBM benefited?
  12. Will this affect me if I am in the M-plan?
  13. How much of the billion dollars is mine?
  14. If it is not transfered, will I get the money?
  15. Can the Pensions Ombudsman help?
  16. Do we need some lawyers on our side?
  17. Why is what is happening at Barclays important?
  18. Why is Equitable important?
  19. I retired a decade or more ago. This could not have happened then. What has changed?
  20. Where do America, South Africa, Argentina and so on come in to the picture?
  21. Who is in charge of the AMIPP activities?
  22. Are the government and other political parties involved?
  23. Are the Unions involved?
  24. Why would the trustees be biased?
  25. Why are there two Americans on the Trustee board, and what benefit do they supply?
  26. What are Sections and the Main Plan?
  27. Was I wrong to believe that I was contributing to the C-plan, and not some "Main" plan?
  28. So this could be a legalised Maxwell?
  29. I am comfortably well off, why should I get involved with all this?
  30. Companies take contribution holidays all the time, why worry about this one?
  31. Surely the contributions from salary and by AVC that I made are better protected from these transfers?
  32. IBM and the Trust have discretionary powers.  What does "discretionary" mean?
  33. Why is there no subscription for AMIPP?


1. What is IBM?

Strictly speaking, there are three companies involved with a C-plan pension. There is IBM US, there is its subsidiary IBM UK, and there is IBM UK Pensions Trust Ltd. IBM UK appoints the majority of the directors of IBM UK Pensions Trust Ltd. Unless qualified, "IBM" can mean any of these companies, or a combination.

2. What is the C-plan?

Many companies have more than one pension scheme over time, because regulations change or they want to offer differ benefits. IBM schemes are distinguished by a single letter prefix, hence C-plan, N-plan, M-plan etc. The C-plan is closed, so nobody can join it and its members leave by dying.

3. What is this billion dollars about?

It is an estimate of what, if current behaviour continues, will be transferred out of the C-plan funds. In the long run the amount could be more. In the short run, up to now, about one thirtieth of that has been transferred.

4. Don't we elect trustees to watch out for that sort of thing?

Yes, we do, but they can be outvoted by the IBM nominated trustees. On the board of IBM UK Pensions Trust Ltd, directors and trustees are the same thing. Together they make up "the Trustee".

5. Why didn't I know about all this?

IBM says it has told you all you needed to know.

6. Why have I not heard through my local IBM Club?

The clubs are funded by IBM and naturally avoid doing anything that might be see as biting the hand that feeds them.

7. Couldn't the elected trustees have just told us what was going on?

The trustees COULD have told us, since they publish an annual report. It may well be vetted by IBM UK before being published, and of course only tells us what the majority of trustees want to tell us.

The trustees are bound by confidentiality and communication with them is only allowed via the pension trust department.

8. Don't the trust deeds protect us?

A majority of trustees can change the trust deeds. The deeds have been changed. It is a matter of dispute whether the original deeds allowed transfers, whether the changed deeds do, whether the original deeds allowed for the changes made, etc.

9. Aren't there regulations that stop companies taking money from funds?

Yes, strong enough ones to prevent what has happened, but they only apply when the company, IBM UK for us, has been paid the money.

10. Has IBM taken the money?

Certainly IBM has benefited from the money but there are technicalities about whether is has been paid the money. An analogy may help. When somebody is given a company car they benefit but are not given the money; rather they are given something which they would otherwise have paid for. The taxman says that is not much of a difference, and taxes the benefit as if there was direct payment. IBM's lawyers say that the difference between benefit and payment is enough to make the pensions law inapplicable.

11. How has IBM benefited?

By not having to pay money to support the M-plan. IBM has never put any money into that fund.

12. Will this affect me if I am in the M-plan?

The M-plan is modern. Whether the money that you eventually take out came from IBM, from members of the C-plan, or from investment of such money does not make a difference to the amount you get. So as an M-plan member you are a non-combatant on the issue of C-plan transfers. However, you might be concerned about IBM's treatment of pensions in general.

13. How much of the billion dollars is mine?

Strictly speaking none, because legally all the funds are owned by IBM UK Pensions Trust Ltd. However, the amount divided by the approximate number of C-plan members comes to over $43,000. Your mileage may vary.

14. If it is not transfered, will I get the money?

Not if economic conditions turn sour. Reserves serve a purpose in keeping the pensions flowing through thick and thin times. However, if conditions are good and reserves build up then a payout is almost inevitable because the tax regime discourages very large reserves.

15. Can the Pensions Ombudsman help?

There is a pensions Ombudsman, and an organisation (OPAS) that filters and administers complaints for him. However, Ombudsman decisions can be overturned in the courts so ultimately judges make the decisions, not the Ombudsman. The Ombudsman does have more powers to find things out than any retiree has directly.

16. Do we need some lawyers on our side?

That would be expensive. Although they are not as partisan as lawyers chosen by the fund members would be, the Ombudsman route does use lawyers. So the Ombudsman route is analogous to going to the legal process with legal aid. The Ombudsman does not allow a complainant to use his services and also hire lawyers at the same time.

17. Why is what is happening at Barclays important?

The Barclays case has some similarities with the C-plan one at the level of general pensions mechanisms. The way retirees were treated is different, and particulars are different. The (previous) Ombudsman decided for the employees but was over-ruled by a judge on appeal. It is important to one of the complaints C-planners have, about the legality of the transfers.  More on this is in the legal section.

18. Why is Equitable important?

There is no connection with C-plan transfers at the level of pensions mechanisms. The discussion on the website shows the value of the site for more than the transfers question. (However, the Equitable case might be relevant to the C-plan as an example of the dangers of not compromising. The judges swung from side to side, eventually deciding by the slimmest of margins on an outcome that has proved bad for both sides.)

The Equitable case is important to what "discretionary" means - see FAQ 32

19. I retired a decade or more ago. This could not have happened then. What has changed?

Mr Gerstner, who had no experience of the IBM you knew, and who believes pensions are "old-fashioned", was appointed to lead IBM in 1993. IBM describes the era since then as "new IBM". Writers to this site believe a change of direction occurred then or a bit before. The new IBM culture is not the classical IBM culture that you recall.

20. Where do America, South Africa, Argentina and so on come in to the picture?

America and South Africa show similar stories of unbalance and change directed at making pensions cost less for IBM. Argentina is about the change of IBM from earlier times.

21.  Who is in charge of the AMIPP activities

There is a contact list for AMIPP. A small group of people registered with AMIPP co-ordinate the activities and those are reported in the newsletter. Separately from AMIPP, other people have made formal complaints on a personal basis.

22. Are the government and other political parties involved?

These people are concerned about pensions in general, and the effect on public confidence in pensions brought about by the Equitable, AXA, BA and Barclays cases for example. They will have a hands-off approach to the IBM case while the Ombudsman is involved. Watch the party manifestos for indications of whether they think pensions law needs strengthening.

23. Are the Unions involved?

In general Unions are active on the pensions front. Individual IBMers may involve their union in pension matters but, as yet, there is no collective bargaining on this issue.

24. Why would the trustees be biased?

The voting records of trustees are not available to retirees so some direct evidence which might exculpate particular trustees is missing. There are particular concerns about JD Serkes and TF Cadigan who are senior IBM US executives closely associated with new-IBM, and receive stock options which have a value geared to IBM profits.

25. Why are there two Americans on the Trustee board, and what benefit do they supply?

This is a company decision, which so far has not been answered.

26. What are Sections and the Main Plan?

Once the transfers had started, IBM could not avoid discussing them in letters to enquiring retirees, although they did avoid giving any explanation to retirees in general. "Sections" and "Main Plan" are terminology introduced then. Watch out for the terms being used nowadays to describe pre-1997 circumstances, before the terms existed!

27. Was I wrong to believe that I was contributing to the C-plan, and not some "Main" plan?

Thousands of members see it the way you do. However, that will not necessarily prevent IBM's lawyers persuading a judge that you were wrong, or that the members viewpoint is irrelevant.

28. So this could be a legalised Maxwell?

It is like the Maxwell case in that funds have been moved in a way that does not benefit any fund members but does benefit the company. Whether it is legal or not is disputed. Maxwell needed the money to keep his companies afloat whereas IBM will be profitable with or without the transfer of funds from the C-plan.

29. I am comfortably well off, why should I get involved with all this?

There are people who feel involved for other reasons than the prospects, up or down, for future increases. Most feel that something is wrong, ranging from simple unfairness to world threatening excess corporate power; these people remember that bad things happen when nobody acts for the good. Some people have motives that are special to IBM - they are proud of the classic IBM way of doing business that they were part of, and don't want to see that model submerged by the New IBM margins-of-legality regime.

30. Companies take contribution holidays all the time, why worry about this one?

A "contribution holiday" occurs when nobody needs to add money to the fund so, in particular, IBM does not. The case of these transfers is different because the M-plan does need to have money put in it. IBM is liable, but the money is coming from the C-plan.

31. Surely the contributions from salary and by AVC that I made are better protected from these transfers?

There seems to be no legislation that distinguishes between the different ways in which, at retirement, your stake in the C-plan was built up. However, the contributory nature of the C-plan may affect the Ombudsman's view of events. Also, you might feel you had some valid complaint about being misled into leaving your money with the IBM Pensions Trust when you retired.

32. IBM and the Trust have discretionary powers.  What does "discretionary" mean?

These powers allow them to make choices, in circumstances where what they should do is open to choice.  Discretionary powers have to be exercised in accordance with their purpose.   Click for a fuller explanation.

33. Why is there no subscription for AMIPP?

The current costs of AMIPP are low - we just pay to have the website hosted by an Internet Service provider and to put stamps on letters to MPs and so on. All the generation of material, maintenance of email lists, etc. is done with volunteer effort.  A handful of people have written 50 cheques to give the treasurer something to put in the AMIPP bank account, but that is the extent of it.  Amongst the messages you will find discussion of what might be done if a need for large sums arose.  Click for a fuller explanation.


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