In Reply to: Re: Ireland - 1 year rolling contract no PENSION!! posted by Jack [!] on 22 October 2004 at 15:55:35:
I hope this doesn't sound patronising but I think this is another good anonymous posting. It sticks to the questions posed by the thread initiator. It sticks to the topics of IBM management and prospects. The view point is one that we have heard from others but it is not simply a repetition of old stuff. There is no criticism of individual posters, identity speculation, or berating of the Webmaster.
Jack asks "Maybe a MED would tell us what the capital benefit to IBM would be in offloading the C Plan obligation without provision for discretionery increases. "Unthinkable"! "Too expensive"! "Impossible". But how much in fact would they save? leavce out the premium for the risk on xfer."
I don't know the answers here and I doubt whether anybody does. It is in the nature of calculations made by actuaries that they stick mainly to pre-defined calculations defined by their professional body. What-if answers are harder to obtain. But on general principles one can get an outline. Is it unthinkable to offload the C-Plan? No, it cannot be, because people have thought about it and made contributions on this website. It has been explained what buy-out implies and how the regulations have constrained buy-out since June 2003. "Impossible"? Yes, because there would be no party to take on the deal. The insurance industry would be capable of taking on a maximum of about £0.5 billion of liabilities and the C-Plan liabilities are several times that. "Too expensive"? Let's not go there for something that is impossible. However, Jack suggests leaving out the premium the insurance company would want to ensure it was confident of a profitable deal. If we do that, the question lines up with the question "What are the discretionary benefits costing?".
That is a question the actuary could easily answer by feeding his computer a zero parameter for percentage increases. But it has not appeared in any annual report or actuarial report. It is worth noting that the financial significance of discretionary increases is diminishing with time. Somebody who retired a while ago, with all service pre-1997, will be most concerned about discretionary increases. (Very roughly, depending on age etc, the pension with expectation of increases that they retired with was, on the basis of income over remaining lifetime, worth the same as a no-increases pension half again as big.) On the other hand, somebody retiring with all their service after 1997 won't care about discretionary increases because they wont get any - they will only get regulated increases. Aggregating across the individuals, the discretionary increases become less significant with time. Optimists will be encouraged by the fact that every year passing with discretionary increases no worse means a year nearer the stage when overall cost of such increases looks small from a Corporation perspective.
Another question was about what a journalist would make of this site. I suggest a knowledgeable journalist would at first be impressed. They would note that no other occupational scheme members' association has a website with this one's breadth and activity. They would note that the ability to communicate almost instantly with some tenth of the scheme membership (as our newsletter does) is a power that comparable associations do not have. I think they would note the potential for a letter writing and MP visiting campaign analogous to the one which successfully limited the IBM US first effort in moving to cash-balance plans.
They might decide there was little prospect of "rising up as one" but that may be because those advocating "rising up" and "positive action" show little sign of knowing what such activity would entail.
(Not with trustee hat on)