Assessment by Dave Mitchell

Dated: 23 September 2000

The Occupational Pensions Regulatory Authority (OPRA) has published a document, Note 3, which outlines the steps a company MUST go through before it can take money out of a pension fund. IBM UK certainly hasn't gone through these steps - we'd all have been informed if it had. That's why IBM is so insistent that the two sections are part of the same scheme - it claims it's just moving funds about within the same scheme.

But there's another way of looking at this.

By the M Plan rules, IBM has to contribute each year to the M Plan (8% of salary for each employee member). So it should have contributed in 1999, 1998 and 1997, some 21 million pounds in all. There's no record of this in the IBM balance sheet of course, how could there be, since IBM didn't make any contribution - it took the required money each year from the C plan "surplus". But surely this means that IBM is failing in its statutory duty to put defined amounts of money into the M plan.

It seems to me the only way that IBM can claim it's putting ITS money into the M plan - as it's required to do - is admit that it's doing what we claim - taking money out of the C plan (so it becomes IBM money) and then putting it into the M plan. But this means admitting that they've broken the OPRA Note 3 rules, doesn't it? Even if they maintain that they are putting it back into the same scheme, they still have to admit that (for a short while) they illegally took it out.

So either they haven't been putting the money they should into the M Plan or they've been illegally taking money out of the C plan. Either way it seems to me they've broken the rules.

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