The Rt. Hon. Virginia Bottomley, M.P. House of Commons LondonSW1A 0AA

Dear Mrs Bottomley

I am writing to you on a complicated matter since you have been very helpful to me in the past.

I retired from IBM in 1991 aged 58 and on a final salary Pension Plan known as the "C" Plan which is administered by the IBM United Kingdom Pensions Trust Limited.

Briefly the rules of the plan, which were given in writing as recently as 1994 were that the Company would make a specific allowance for increases at 70% of the R.P.I. within its annual contribution to the Pension Plan. The company also stated that it was its practice to review pensions on a regular basis and to make discretionary increases at varying intervals but not necessarily on an annual basis.

The Pension Fund has been managed very well and the Pension Manager stated recently that it had been valued at £4.1 billion giving it a surplus over liabilities of £700 million. As a result the company has taken contribution holidays and has made no contributions to The Plan since 1997.

Despite the above the company has taken to giving increases at 70% of R.P.I. only at eighteen months intervals whilst when I initially retired increases were given at twelve months intervals. This means that based on the recent R.P.I. figures supplied to me by The Department of National Statistics by the time I am 76 my pension will in real terms be worth only 30% of the value when I retired, despite The Plan having such a big surplus. My first concern is that whilst the above is certainly not morally correct are the actions of the company legally correct under the 1995 Pensions Act?

My second concern is more serious. In 1997 the company declared the "C" Plan a closed fund which means of course that once its liabilities have been met all remaining funds will revert back to the company. In its place the company set up a Money Purchase Plan called the "M" Plan for current and new employees. The company once again made no contributions to this fund but set it up by transferring monies from the "C" Plan fund. This was money which had been invested over many years by the members of the "C" plan and by the company on our behalf. What is very worrying to us is that because the new "M" plan was set up after the 1995 Pensions Act I understand that the company is obliged to make pension increases to retirees from that plan at 100% of R.P.I. or 5% whichever is lower. This means that retirees from a pension plan which has been funded by our contributions will receive better pension increases than we will receive. If this is legal then it must be a loophole in current legislation.

We have been advised by the manager of the Pension Fund that the company reserves the right to make all decisions regarding increases and that the directors of the Pension Trust, whether they be company or retiree elected, are only responsible for the administration of the fund.

I understand that pensioners from other UK companies have had similar complaints, Barclays Bank and Ford being two that I have heard mentioned and I would like to know if there is anything that you can do on my behalf or can you give me information about the Pension's Ombudsman to whom I could write.

IBM have always had a big presence in the South of England and I am certain that there are many IBM pensioners who are your constituents and

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