Posted by Robin D'Souza on 17 October 2000 at 16:57:07:
http://www.thetimes.co.uk/article/0,,20346,00.html
TUESDAY OCTOBER 17 2000
TIMES article:"IBM to face inquiry over pension fund"
BY JAMES MOORE
IBM could face a multimillion-pound bill to top up one of its pension
funds if the Pensions Ombudsman upholds complaints that the
multinational has acted wrongly in cross-subsidising contributions to
its schemes.
The watchdog is investigating a complaint that the company has
made use of a £700 million surplus in one fund to pay contributions
to a second, less well-funded plan.
Members of IBM's original pension scheme are particularly angry,
because they say the plan pays very low increases to them once
they have retired and some of the surplus ought to go to improve
this.
The ombudsman has already ruled against Barclays in a similar
case, after the bank used part of a £1 billion surplus from the
Barclays Bank UK Retirement Fund to finance pension benefits
accruing in its Retirement Investment Scheme, set up to replace it.
The ombudsman said Barclays "breached good faith" and was
"guilty of maladministration", ordering it to pay back all the surplus
used plus interest. Barclays's appeal to the High Court will be heard
at the end of the month.
Companies such as IBM and Barclays have been replacing
schemes which guarantee a percentage of final salary at retirement
with "money purchase" schemes where the final payment depends
on investment returns and workers take the investment risk.
An IBM spokesman declined to comment on the issue.
A spokesman for the ombudsman confirmed a complaint about IBM
had been received but was unable to comment on the case until a
decision had been reached.