In Reply to: Solvent windup posted by Bob Maddock on 26 November 2004 at 16:03:40:
Bob,
Where the Echo writes "compromise agreement" it is referring to something technical - trustees agreeing to "compromise the debt on the employer". There is a thread worth reading on this below and the link I give below in this message is to a message in that thread that has a further link. An alternative route to detail is to Google on "Bradstock Pensions" since Bradstock was the case that set the principles.
The trustees who agree to settle for less than the "buy-out" amount from a solvent company have to able to justify that. There might be a combination of reasons about the difficulty in pursuing the debt (in this APW case pursuing it to a US parent company) and the near-insolvency of the company.
So to answer the direct question, the only way something in the same legal circumstances as this could happen to IBM is if IBM came close to insolvency before April 2005 (when the new Pensions Act becomes relevant). I feel it safe to say that is impossible - a company that has spent some $50B buying its own shares in recent years is not strapped for cash.
In answer to Freddy's question about the impact on the already retired, the (almost?) inevitable consequence of compromising the debt is that the scheme will have to wind-up, as happened with Bradstock. (The scheme doesn't have a sponsor and it doesn't have enough assets to hope that future returns on those will pay all the pensions forever - windup is the only option). At windup there are regulations about who gets priority on what little there is. Those rules say the retirees get priority. So when the Echo says "His projected pension has been cut from £12,000 to £2,400" it doesn't meant the fund only had 20% of what it needed, it means that after the retirees had been (almost fully) provided for there wasn't much left for the employees.
It may be worth commenting on prospects for the APW workers. If a Court approved the compromise deal there is little prospect of amending the deal. If not they can get OPRA to review whether it was genuinely a good deal (or perhaps the trustees too easily took the company's word that it could not afford to continue the plan).
If the deal isn't changed, they will fall on the Financial Assistance Scheme, at best. Here the Echo and Lord Oakeshott may be raising false hopes when they talk about "compensation". The Minister has emphasised that this is an "Assistance" scheme, not a "Compensation" scheme. That is a way of saying that the scheme won't be given enough taxpayers money to ensure the tens of thousands who have lost nationally get anywhere close to the pensions they were led to believe they would get. (There is a case before the European Court of Justice which could force the government to do more but that won't resolve for years)
(Not with trustee hat on)