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10 August 1999 Thank you for the recent copy of the Pension Plan 1998 Members' Report. I am concerned as to the way in which the surplus assets in "My" Pension Fund are being heavily used by the employer not only to take a contributions holiday from adding to the Defined Benefit Plan but also to take a contributions holiday from the Defined Contribution Plan. When I refer to "My" Pension Fund I am referring to the pension that I have built up that is secured not only by my 25 years of contributions to the IBM fund but also by 10 years of contributions to the Merchant Navy Officers Pension Fund (MNOPF) which I transferred to the IBM fund before retirement. The MNOPF awards discretionary increases to retirees much in the way that IBM does but uses the surplus in a very different way to ensure that their retirees are well cared for and do not fall behind in the cost of living. These are the recent increases awarded to MNOPF retirees:
1990 - 6.0% plus a one off 25.0% 1991 - 6.0% 1992 - 6.0% 1993 - 5.0% 1994 - 1.9% 1996 - 2.5% 1995 - 2.5% 1997 - 7.0% 1998 - 2.5% If you compare these awards with recent IBM increases it is clear to me that the IBM trustees appear to be more interested in building up a large financial surplus to the benefit of the employer rather than looking after the interests of retirees. I believe this performance contravenes the spirit of Pensions Direction particularly where the current pension holiday appears to be using "My" surplus to meet the companys obligation to fund future Limited Price Indexation, for service after April 1997, as required by the 1995 Pensions Act. Would you please let me have your comments on the above and let me know what plans the Trustees, together with IBM, have to rectify this unsatisfactory situation. Additionally, on reading through the 1998 Members Report I failed to notice any reference to Barry Morley's resignation other than as a line item on the back page, I have now heard that he resigned on a point of principle, perhaps you would be kind enough to let me know what this point of principle was. Yours sincerely David Redman
To DA Redman 19 August1999 Dear David Thank you for your letter dated 10 August 1999. The duty of the Trustee of the pension plans is to administer these in accordance with the Trust Deed and Rules. Under the Defined Benefit Section, members, such as yourself, are entitled to a pension based on pensionable earnings, pensionable service and age at the point of retirement The company and the Trustee are then required to ensure that the plan has sufficient assets to meet the benefits that members are entitled to. Since 1997 the Scheme Actuary has advised the company and the Trustee that the Pension plan does have sufficient assets to meet its liabilities and, therefore, that no company contributions are required. At all times the Pension Plans have operated in accordance with their Trust Deed and Rules and on the advice of the Scheme Actuary and Legal Advisers. Your entitlement under the Rules has not been impacted by the funding actions taken. The duty of the Trustee with regard to Pension in Payment Increases is to make an appropriate proposal to the company for its consideration. For your information, the Trustee has made such a proposal to the company for an increase in the near future and we are awaiting its decision. Finally, with regard to Mr. Morley's resignation, a letter was sent to all retirees and I enclose a copy of this for your information. Yours sincerely
David Newman
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