This page created 18 Mar 2003

Give or take a few words, this is what Brian Marks said to the AGM.  AMIPP is showing it because it expands on his election statement:

I am not a trustee of your pension scheme.   But if I can avoid disqualifying myself by becoming bankrupt or certified insane for a few weeks then I probably will be.  Strictly speaking, I will be a Member Elected Director of the Trustee but "trustee" will do for now.  The election process involved writing an election statement.  Only a few words were allowed and my statement was cryptic, with reference to associations that I chair and so on.  People have asked me to elaborate on the election statement, and your committee has given me some time now to do that.

I have some gloomy stuff about why your pension has steadily eroded in value when the average occupational pension has not, and how things might get worse.  To avoid that sounding too negative I think we should start by reminding ourselves that in comparison with most of the world we have been immensely lucky in where we lived, and in having talents that we could turn into cash, and that even significant dents to the value of our pensions will leave us amongst a fortunate few.

Let me thank any voters who voted for me.  If you voted for others, or like the majority of the members didn't bother to vote at all, that doesn't make any difference to what you should expect from your elected trustees.  I have met other electeds under North Harbour auspices. All, I think, are willing to be approached by you with individual concerns.  We won't be able to tell you anything the trust regards as confidential and we won't individually give a position for the board - that would risk us giving different "official" positions.  But we will know about what is public and may be able to point you to what is relevant.  If you want to approach us individually you can write to us c/o the trust.  (That will work for some trustees - for others the trust management intercepts and reacts on their behalf.)

When MEDs were introduced the minister, Peter Lilley actually, said that their purpose was to give members more influence in the running of their schemes.  We MEDs have aspirations for pension promises to be honoured, for better communications, restoration of trust and confidence amongst members and so on.  However, if you ask in 3 years time what we have achieved then the answer might well turn out to be "not a lot".  This is because the appointed directors are in a majority and can render the elected ones irrelevant, if they choose to.  There is a particular problem because the bargain you made, to work in return for a future pension, was made with IBM UK and functions under UK law, whereas it is Armonk that calls the shots.  To an American businessman the whole idea of member elections to boards is laughable, or even perhaps a threat with a tinge of communism.  There is nothing wrong with that, it is just the way the American system works.  The problem arises when Armonk appoints Armonk executives to the UK trust board, and uses its hire and fire power over the board to ensure that Armonk attitudes replace the "fair play" and member influence basis of the UK system.

How do we know it hasn't worked well?  Firstly from the outcomes, with discretions not used for the purpose that they were intended for, and with scheme changes that leave members and potential members worse off.  We also know from trustee experiences.

(Author's note - people not from Hursley should skip the following jocular paragraph:-)

You may not know the names of the people I mention, because they are not from Hursley, but they are all IBMers.  As you know, that means they are not as attractive or talented as Hursley people, but are nearly so.

Barry Morley, who was a very experienced trustee, resigned because he felt he could not do his job under the regime then.  Don Milton did not stand again in the recent election.  I don't know all his reasons for that but I do know he was young enough to stand, that people tried hard to persuade him to stand again, and that he was frustrated by his experiences.  There is also information about Mike O'Sullivan that I will come to later.

In short, as elected trustees, we aim to do all the right things, but circumstances may render that ineffective.

I am chairman of the Association of Members of IBM UK Pension Plans, AMIPP for short.  Some of you won't have Internet access and I can understand why you wouldn't - working through emails every day can be a lot like being back at work.  Those who are wired-in will probably know that AMIPP supports a large website, well over a thousand pages, with an electronic forum anybody can use, and it sends an electronic newsletter to more than 2000 people.  Obvious question, why a new association when there are already associations like the one here?  Two answers to that.   One is that these IBM sponsored clubs are just for retirees whereas AMIPP is for all members.  The other is that the sponsored clubs have something like "social and leisure purposes" built in to their constitution and that prevents them taking a position critical of IBM.  I don't know of any Hursley meetings where that was relevant but I was at another meeting which reached the point where the wording of a critical resolution was being considered (and I assure you the motion would have been passed) when the organisers decided it couldn't be voted on.  There was a similar story at the last London Retirees AGM - the retirees had booked a meeting room but IBM took it for other purposes and some retirees had to be told they couldn't attend because the alternative room was too small.  The retirees who did attend proposed a resolution criticising what IBM had done but, again, that was deemed inappropriate.

So there are reasons for AMIPP, and one powerful one is the Trust's policy of only telling you as much as the law requires.  You may remember the £31M that was described as miscellaneous in the actuarial report; the Trust said it would be a waste of time to explain it.  Now £31M is about a £1000 per member, and if you had an unexplained £1000 on your bank statement you would probably think it worth enquiring about.  We never did get to the bottom of that particular one, but generally AMIPP lives up to the slogan on its home page - "Keeping you informed".

Changing topic, let me tell you about the Pensions Ombudsman.  I can only talk about generalities and administration because what happens during an investigation is confidential.  You probably know the background.  Dozens of members wrote to IBM & the Trust with concerns about whether pension promises were being honoured.  Dozens wrote to the Occupational Pensions Advisory Service, OPAS.  OPAS filtered those into a few complaints that went to the Office of Pensions Ombudsman, OPO.  Five of these are mentioned on the AMIPP website, with varying amounts of description.   

Of those five, two are being investigated (those from Mike Cawley and Dave Mitchell) and three are held up to be done later.  That's a pity because it prevents the OPO having a comprehensive picture of what occurred.   The first of the two complaints is now in its third year of investigation, and more like fifth year if you count from when Mike Cawley began complaining as opposed to formal investigation. 

So what do we expect from the Ombudsman's Office?  Most people would like to see the OPO as a consumer protection agency, providing a balance for the fact that individuals complaining don't have money for lawyers whereas trusts have our funds, and companies have big budgets, so they can bear down on complainants using teams of lawyers.  We would like to see the OPO as a balance to that. 

Most people don't want the OPO to act as a complaints department for the pensions industry.  I don't know about your experiences of complaints departments but I can remember an airline losing a suitcase of mine and then expecting me to have receipts for every shirt and tie that was in it.   There are a vast number of people working in the pensions provision industry and what we don't want is the OPO acting as their complaints department, making life as slow and difficult as possible for the consumer and eventually proposing the cheapest compensation. 

In practice, of course, the Ombudsman comes somewhere between these extremes.  Lack of resources doesn't help.  But it is the overall system, where a mistake in favour of members will usually get rectified by appeal to the courts, while a mistake against the members will not be, that creates pressure for expediency to be a deciding factor. 

We will have to wait and see whether the OPO will ultimately act like a complaints department, but AMIPP folk think their case has already been harmed by the fragmented administration of their complaints. 

Moving on, the other association I mentioned in my election statement was the Confederation of Occupational Pensioners Associations (COPAS).   COPAS is confederation of associations like the IBM one, AMIPP, that I was describing just now.  Why is COPAS needed?  Because there is no other national organisation that speaks for us, the consumers of occupational pensions.  Why have you never heard of COPAS?  Because although it has been around for ten years it only has forty something associations in it because few companies have independent member associations.  It is difficult to form a retirees association without the co-operation of the company.   People get geographically scattered.  Companies will wrongly use the Data Protection Act as a reason for not giving associations the home addresses of members.  The people running pensioner associations that are independent of the company have to work very hard. 

However, you may well have heard of the National Association of Pension Funds (NAPF).   That represents the pensions industry and it has a budget a thousand times that of COPAS.  So when it comes to lobbying, the consumer of pensions represented by COPAS, doesn't get much of a look-in compared with the providers represented by NAPF.   That is limiting for COPAS but it doesn't make COPAS useless; COPAS is able to respond to the many consultation exercises that the government is so fond of.   

From the newspapers, you will know that faith in occupational pension schemes is taking a hammering.  You thought, I expect, that the idea of a pension fund was that it was a place to keep the necessary funds separated from the company.  It now turns out that companies can put too little into the fund and then close it down when it doesn't have enough money to meet its obligations.  You thought, I expect, that the trust was an independent third party looking after your interests.  It now turns out that too often a trust operates as a subsidiary of the company, with company executives on the trust arranging that the fund weakens as the company weakens financially, with both eventually going down together. 

The over-riding issue here is whether you believe our pensions are corporate charity or whether you believe they are a bargain finalised when you retired.   The European Court of Justice has lent towards the bargain theory by classifying pensions as deferred pay.  But our government takes the line that occupational pensions are corporate charity and companies must be pandered to or they will be less charitable. 

In short, there are organisations like COPAS arguing for the consumer, but what they can do is limited.

Just two more things I would like to comment on.  As we return to this cafeteria each year it gives the impression that nothing has changed.  Kevin Waller remains a good man with his heart in the right place.  But behind those scenes IBM now is not the IBM you knew; it changed.  Mr Gerstner did not have the same management philosophy as Tom Watson - it would be hard to find two more different styles.   And what IBM does has changed with the new emphasis on buying and selling staff in bulk so as to emphasise selling services.  IBM once had underlying strength in a loyal staff and lots of development and manufacturing plant; this underlying strength could see it through periods of mismanagement.   Those strengths have diminished and the hurdles to competing with IBM have got lower - the relevance to pensions is that we should not assume that IBM in the future will have the stability that IBM in the past had.

Secondly Mike O'Sullivan.  I want to mention this only as a small example of the immense privileges that institutions give themselves when they write their own rules.  IBM and the Trust could appoint anybody they like for the spare director slot - they could appoint Mike again or they could appoint somebody off the street.  But even more than that, having appointed them, they could deem them to be a Member Elected Director, according to their rules, even though you were not involved in the choice.   Amazing, but that's corporate privilege for you.

So, in summary of all I've said, looking internationally, nationally or locally, corporate privilege is strong and consumer protection is weak.  This is particularly so with our pension scheme.

I have no quarrel with anybody who says "Life is to short to worry about dents in my pension" but for those who are interested I would say that there is plenty to take an interest in.

 Index of election material