Posted by George Elder on 26 October 2000 at 10:28:05:

Several years ago I pointed out to David Newnam advice I had received from an Actuarial friend that IBM could not use C plan money to pay M plan contributions without the money being liable to tax.We in Greenock organised a multi signature speak up to complain about this abuse of C plan money but were told in reply it was all legal under the than 1998 constitution.

However I have seen some references on this site to changes to the trust deeds to plug this exposure,what changes?

Posted by Dave Mitchell on 26 October 2000 at 18:34:00:

In Reply to: Tax liabilities on IBM for M plan payments from C plan posted by George Elder on 26 October 2000 at 10:28:05:

If IBM had removed money from the C plan and then put it into the M plan, it would indeed have to pay 40% tax on what it took out first. But it would also have had to get approval from OPRA before it could take it out. It didn't do that. It maintains (wrongly in our view) that it didn't take the money out, merely transferred it from one section (the C PLan) of the overall scheme to another section (the M Plan). This is one of the major issues we have put before the Pensions Ombudsman.

What it did in February this year is alter the Trust Deeds (without telling us) so that IBM no longer has to pay a contribution to the M Plan - each member merely has to have the appropriate amount credited to his account (the amount coming from the C plan surplus of course). However between 1997 and 1999 (inclusive) it should have been contributing IBM money to the M Plan. This is another of the issues we have put before the Pensions Ombudsman.

See the link below for Trust Deed extracts.

Dave

• Trust Deeds Extract