In Reply to: Re: Speculation re. compulsory transfer by IBM US of employees to cash balance plan posted by Brian Marks on 06 March 2003 at 16:40:49:
: This is the US version of the cheapening of schemes discussed a few messages back. The links from there give more of the background.
: The UK view might (or might not) be illuminated by this extract from a (humourous?) article in the the Financial Times:
: "Dear colleague (or should I say long-serving sucker?),
: I am writing to you with exciting news (for the board, anyway!)
: about changes to Acme's defined benefits pension scheme, which we
: plan to shift to a new-style "shared risk" basis. (In other
: words, we dump a lot of our risk on to you.)
: As you are no doubt aware, under the old scheme you could expect
: to retire in seven years' time, at the age of 62, on a pension
: equivalent to two-thirds of your final salary. But this
: expectation now lacks economic viability. (In other words, our
: pension obligations are weighing heavily on our share price.)
: You may recall that three years ago we closed the defined
: benefits scheme to new members. (We foolishly thought that would
: solve the problem, but now Mercer, the consulting group, points
: out that the costs for a typical final salary scheme are expected
: to rise 30 per cent over the next five years, and that closure to
: new entrants only cuts that by 5 per cent.)
: Now we intend to close the scheme to existing members,
: essentially freezing our obligations. This is due to
: circumstances entirely outside our control. First, we are all
: living longer:. That is obviously wonderful news, and we on the
: Acme board are delighted to think of the swelling band at our
: annual pensioners' reunion (if any of you are still speaking to
: us by then). But it also pushes up the cost of the scheme.
: Second, you will be aware of the dreadful bear market in
: equities, which has savaged the scheme's assets. This, again, is
: entirely outside our control. (OK, Acme has taken a pensions
: holiday for the past 15 years, which a pernickety person might
: view as the equivalent of a loan from the scheme that needs
: repaying, but we are not interested in going down that particular
: route, thank you very much. And if you want to blame anyone,
: blame the crazy consulting actuaries who told us a holiday was
: just fine and a 75 per cent fund weighting in equities was
: rational behaviour.)
: I want to stress that under our exciting new "shared risk" scheme
: you will still get a guaranteed pension (OK, far less than what
: you were expecting) and you will have the opportunity to top that
: up by putting money into the company's stakeholder scheme (but
: you will not get much benefit in the mere seven years you've got
: left here!).
: We realise that you may need time to appreciate the full benefits
: of our new plan. (Yes, its a betrayal of 35 years' loyal service
: and a clear promise from Acme. But lots of companies are starting
: to think this way, we believe the law is on our side, and we are
: confident we can ride out any bad publicity.)
: Your directors are convinced this is a "win-win" solution, and we
: commend it to you. (The company wins, and so do we on the board,
: since our huge pay packages are stuffed with options that will
: rocket in value when we've got the pensions monkey off our backs.
: And that, sucker, means you.)"
Rumour and speculation. Is this what this site now deals in? All credibility is lost, particularly by your odious attempt, in the latest newsletter, to draw parallels between possible war in Iraq/the Lockerbie disaster and the complaints of IBM retirees.