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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
- What is IBM?
- What is the C-plan?
- What is this billion dollars about?
- Don't we elect trustees to watch
out for that sort of thing?
- Why didn't I know about all this?
- Why have I not heard through my
local IBM Club?
- Couldn't the elected trustees have
just told us what was going on?
- Don't the trust deeds protect us?
- Aren't there regulations that stop
companies taking money from funds?
- Has IBM taken the money?
- How has IBM benefited?
- Will this affect me if I am in the
M-plan?
- How much of the billion dollars is
mine?
- If it is not transfered, will I
get the money?
- Can the Pensions Ombudsman help?
- Do we need some lawyers on our
side?
- Why is what is happening at
Barclays important?
- Why is Equitable important?
- I retired a decade or more ago.
This could not have happened then. What has
changed?
- Where do America, South Africa,
Argentina and so on come in to the picture?
- Who is in charge of the AMIPP activities?
- Are the government and other
political parties involved?
- Are the Unions involved?
- Why would the trustees be biased?
- Why are there two Americans on the
Trustee board, and what benefit do they supply?
- What are Sections and the Main
Plan?
- Was I wrong to believe that I was
contributing to the C-plan, and not some
"Main" plan?
- So this
could be a legalised Maxwell?
- I am comfortably well off, why
should I get involved with all this?
- Companies take contribution
holidays all the time, why worry about this one?
- Surely the contributions from
salary and by AVC that I made are better
protected from these transfers?
- IBM and the Trust have discretionary powers. What
does "discretionary" mean?
- 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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