Posted by Alan Murphy on 10 December 2000 at 22:45:15:
In Reply to: Whose fund is it? posted by N.E. One on 10 December 2000 at 00:53:47:
:1.What percentage of the current C plan fund is attributable
:to IBM's contributions and what percentage comes from the
:retirees and existing employees?
We don't at yet have the FULL story on this one. However, here is some information which you may find useful.
The C Plan started in July 1983 and employees paid 5% of their salary.
From January 1987 the rate for employees was reduced to 4%. This is the current rate.
In 1988 the contributions were defined to be:
a) Employees 4% of pensionable earnings above Lower Earnings Limit
b) IBM pays the equivalent of the 3.8% National Insurance that it would
otherwise pay to a Personal Pension or SERPS.
b) IBM pays the balance of the cost of providing pensions benefits.
Items a) and b) when summed together were defined to be:
"This is your C Plan Account. If you leave the Plan you can transfer at least
the value of these contributions, plus interest, to a non-IBM pension plan"
The 'your' in this sentence implies it belongs to the employee.
Of course, IBM has paid item 'c)' above by doing some topping up over the years, but since 1997 we know that IBM has paid NOTHING to the plan, whilst employees are still paying their 4%. So in the last 3 years the contribution from IBM is zero percent and the employees is 100%.
To work out the overall percentage share over the years, which is attributable to IBM's contributions, you would need to be a pensions accountant. We may soon need to hire one to work this out for us. However, in the meantime, you might like to ask IBM this very question. If you do get an answer, please post it here.
:2.What happens to AVCs? (I'm referring to the additional
:contributions on top of the 4% and I know they are/were
:handled during the contribution stage by Equitable Life).
:What happens at the end - do they ever become inter-related
:at all with the C Plan Fund?
:I hope not but decided to check just in case ..
Yes, the AVCs DO BECOME PART OF THE MAIN PLAN FUND on retirement and commencement of payment. They seem to be subject to the same rules as the C Plan fund when in payment.
Hope that explains it a bit more fully. We are still trying to understand all this stuff ourselves so please correct me if I have got anything wrong in the above.