This page created 4 Aug 2006

AMIPP provided space for Brian Marks to describe his expectations as a trustee, after scheme members voted him to first place in the 2002 elections.  Here he comments with hindsight.

Trusteeship in retrospect.

Way back in 1992, a House of Commons Select Committee noted: "Trust law presupposes that the interests of the settlor and the beneficiaries coincide, but in reality there is a potential conflict between the interests of the employer and those of members. Under the guise of a trust the employer can maintain effective and total control of the trustees, the investment power and the power of amendment."
 

It would be an exaggeration to apply that description to the IBM UK Trust today. However, the tendency towards that behaviour is current.
 

CONFIDENTIALITY

All trustees are in favour of some level of confidentiality applying to their activities; without it trustee board deliberations would descend into formal statements of pre-established positions, like politicians reciting their party lines. But for particular instances, there are individual assessments to be made that balance secrecy against a perceived benefit to scheme members.  Examples from my time are:

- Dave Mitchell's account of the choice of wording to be in the letter announcing the recent scheme degradations.
 

- Gavin Wilson's election statement coverage of his short-lived resignation from trusteeship. (See also)

- David Heath revealing to a roadshow the vote on the increase of employee contributions deal.

- Jim Lamb forwarding to IBM (without consulting me) an email which I sent to a subset of the trustees.
 

I am now adding to these examples because scheme members can gain from knowing the environment in which the trustees they elect must operate.

US BASED TRUSTEES

My pre-trusteeship expectations about the effects of flying in US based executives for trustee board meetings were realised. I don't think one should be surprised. US executives take salaries from their companies which are hundreds of times larger than the median salary in the organisation. This disparity makes it hard for them to understand financial aspects as seen by individual scheme members, just as you and I would have difficulty understanding the finances of a person in the sub-Sahara. Couple this with the foreigners' difficulty in understanding local culture, such as the British sense of "fair play", and it is clear that US executives are not equipped to be trustees of a UK scheme.

INFORMATION MANIPULATION

The most troubling aspect of the Trust that I did anticipate was being stifled by a lack of information. Here are some of the problems:

BEING UNDERINFORMED AT MEETINGS

Between Trustee Management Meetings (TMMs), the administrators and insiders develop a TMM package geared to what they hope to have resolved at the next meeting. This document, typically 300 pages, reaches an MED a few days before the meeting. This doesn't allow time for checking the data, researching what other trusts do, or reviewing the relevant law. What earlier notice there is about the meeting is inadequate to work out what an MED might do in advance of receiving the package. Further material is distributed at the actual TMM.   Recently, the problem of late material has been getting worse.

BEING UNDERINFORMED ABOUT EMPLOYEES

As you will know, trustees are obliged to consider all scheme members fairly. However a retiree MED cannot adequately know what employees have been told because IBM refuses requests for MEDs to be given access to the pensions part of the IBM intranet. Some fragments from the intranet will reach each retiree MED but selection of the fragments by others removes the MED's capability to judge what matters.

BEING UNDERINFORMED ABOUT SCHEME DATA

An obstruction that I did not anticipate arose when I wanted to analyse scheme data. There are tens of thousands of scheme members and several items of data are needed on each for actuarial calculations. The data which passes from the North Harbour staff to Watson Wyatt, so that Watson Wyatt can calculate the deficit for example, will be of the order of a CD's worth. I asked for a copy of this data, with names and addresses removed if there were any. It was refused. The reason given was that I might misanalyse the data and thus make work for the North Harbour staff in correcting my conclusions. You can judge for yourselves how genuine this reason was, but I was not impressed - I have an unblemished record deriving results from what data has been released. (Incidentally North Harbour doesn't have an unblemished record - annual reports describe (third paragraph from the end) how their records needed cleaning up.)

I tried the alternative of asking for specific computed data. This worked for the simplest calculations but for anything more I got answers to a different question than I asked, with the explanation that these answers were "indicative" of what I wanted.

AN EXAMPLE OF INCOMMUNICADO THEN RUSH

For one meeting of the Benefits Allocation Committee the minutes were emailed out eight weeks after the meeting and then approved by telephone conference within 24 hours. I failed to get connected to the telephone conference (through no fault of the administrators). The minutes were incorrect but I lost the opportunity to get them corrected. 

PARTIALLY TELEPHONIC MEETINGS

You will have your own views on whether telephone conferences are appropriate for meetings that change individual member's lives, but there is no doubt that when there is an attended meeting with some person added in by telephone then the person on the end of the telephone is at a disadvantage.

Most TMMs are scheduled well in advance, sometimes over a year ahead.  This works well for attendances.  On the other hand, the meetings not scheduled well in advance can be unsatisfactory.  There was one meeting that had to be fitted around holidays and other preferences for some potential attendees.  From a wide range of dates there was only one day that Dave Mitchell could not make - the meeting wound up on that date and he had to participate by telephone!

AN EXAMPLE OF SELECTIVE INFORMING

The Benefits Allocation Committee (BAC) gets a briefing on any individual case where it has to decide how to use its discretion. This briefing is vital because the decisions can be life-changing for the individual but based on thin evidence. (The individual who loses out doesn't get the chance to see and challenge the damaging assertions of others.) There is a real risk of the BAC behaving like a charity and making decisions based on moral judgements and assessment of need, rather than following the instructions provided by the deeds. (You might think that charitable approach desirable but it is not what the BAC is meant to do.)

It has been practice for the briefing to note when there was an associated Internal Dispute Resolution Process (IDRP) in play. But in one case that came before me that was not done. We thus had deliberations and a decision at that meeting with the insiders knowing about the IDRP and the two MEDs not knowing. That may or may not have been crucial to the decision reached, but did it represent justice for the individual concerned?

NEGOTIATIONS WITH IBM

I expect you would like to know how the recent negotiated package of scheme changes was arrived at. So would I. Significant negotiations were made by the TMM Chairman (a past IBM finance director) with IBM UK and IBM US executives, with no other trustee present. The documentation of these meetings is minimal, bland and uninformative.

OVERALL

Essentially, MEDs need not only to learn about pension regulations and about the schemes, they also have to battle an organisation where the chairman's powers and the deprivation of information are used to hinder MED effectiveness. (The MEDs warned prospective new MEDs about this. )

 Index of election material