In Reply to: Re: Should I worry? posted by Brian Marks on 08 September 2002 at 08:13:32:
Brian Marks
Could you expand on your advice (as I understand it) that, barring a major withdrawal by IBM and the Trust from their obligations, we should expect a 3% pa erosion in our pension's value rather than 1%.
Are you pointing here to the effect of IBM discontinuing its discretionary increases to match 70% of inflation?
On this site there are comments and arguments that IBM should use the fund's surplus to match most large employer's pension benefits (fixed or discretionary) which fully rise in line with RPI. I support these aims and they may be justified.
But, more vitally, I believe all pensioners (employees, deferred or in payment) have to watch IBM like a hawk to ensure it does not dilute its performance to date in making discretionary increases which at least match 70% of RPI. If that disappears we all have a huge problem coming in terms of income and lifestyle over the 20-30 years as pensioners.
IBM has published the 70% of RPI increases as a practice (admittedly not guaranteed) in its pension material and in its documentation advising staff on voluntary severance, etc. The actuarial assessments assume the 70% increases, IBM funded them in the past and IBM included them in transfer-out values.
I consider continuation of the 70% of RPI increase, unless prevented by some major economic catastrophe (which does not include 'normal contribution holidays', subsiding the M Plan, fluctuations in the fund value or disappointing results of investment options taken by the Trust) to be an essntial part of our 'original bargain made with IBM'.
I support the AMIPP and whilst it may have a wider agenda, surely the very minimum it must secure is the continuation of 70% RPI increases which IBM has provided to date. Can you say what the Association's position about this?