Posted by Alan Murphy on 22 November 2000 at 20:35:14:
In Reply to: Pensions Victory for Barclays - The Times 22 November 2000 posted by Derek Wright on 22 November 2000 at 10:04:33:
The Times article "Pensions victory for Barclays" (see link below) points out that "The drafting of the two schemes as a single trust fund was key to Barclay's success and that employers need to scrutinise their own arrangements to make sure they do not fall foul of this requirement".
Much depends upon the exact words used and we have not yet had a chance to examine the full text of the Barclays case. At present we are scrutinising the IBM Pension Plan Trust Deeds and the various amendments in order to see how similar our case is to the Barclays one. The Barclays pensions scheme was a non-contributory scheme whilst the IBM C-Plan was a contributory one. In the IBM case, it is clear that a proportion of the money did once belong to the members; it was either 4% of their salary, it was transferred in, or it was AVC money used to buy an improved pension.
The High Court made its decision based upon interpretation of the current law. Even if it is shown to be legal to use funds from one scheme to fund another scheme, there are still a number of ethical and moral considerations. The surplus funds derived from the contributions of C-Plan members are being used to fund another plan whose members are guaranteed LPI (RPI up to 5%). The C-Plan members receive an 'ex-gratia' payment of typically 70%RPI, and money once removed from their section of the scheme cannot be used in the future to support ex-gratia payments. The more money that is removed to support other schemes decreases the chance that future increases will be made.
Even if the High Court determines that it is legal to use the surplus derived from the contributions of members, who are not guaranteed an annual increase, in order to fund schemes for members who are guaranteed increases, there is still a question of whether this is "right". If you feel that this is wrong, then you should write to your MP about the problem. The more MPs who know about this, the more likely we are to get a better law.
Write to your MP today - (you may reference this website in your letter).
Let me know if you do write to your MP - I am keeping a list of MPs who have been contacted.