Newsletter No 13

14 October 2002  

A request: If you are an "E-mail Buddy", please print this newsletter and give it to your buddy.  (Even if you are not an established buddy you might feel this particular newsletter is worth printing to give to somebody who might otherwise not see it.)

The public situation with respect to the complaints and the Ombudsman is largely unchanged.   We can make no prediction about when there will be a determination.

We noted in Newsletter 12 that "Some complainants and at least one MP continue to suggest that all the IBM complaints should be dealt with in an integrated and complementary manner, as opposed to the fragmented, serial way they are being administered now.  There is no evidence of a change of heart in the Ombudsman's Office."   Since then there is some evidence, in a letter from the Ombudsman to the MP, of the prospect of an improved consolidation of the complaints. 

This Newsletter is published close to the time of your opportunity to vote for trustees, aka Member Nominated Directors.  The website now has an election section on the background, the voting algorithm, how your vote can influence the result, and the candidates.   We regard it as important that you should vote.   Only about a tenth of the electorate is registered with AMIPP but it is reasonable to assume that this tenth has more interest and awareness about IBM and occupational pensions than the average elector.   Your vote will tend to improve the quality of the election process.

The rules of this election are not symmetric with respect to employee candidates and retiree candidates.  This makes the category of a candidate relevant, as well as the candidate's personal suitability as a trustee.   The website gives reasons why we think electing retirees will tend to benefit employed, retired, and deferred members. 

We recommend that you vote Brian Marks as your number one, Dave Mitchell as number two, Mike Eacott as number three and Mike O'Sullivan as number four.  If you have individual knowledge that leads you to vote differently from this, you might still want to consider this list in deciding your minor rankings.  A coherent collective practice can raise the power of individual votes.  As a hypothetical example to illustrate this suppose we all thought that all the retiree candidates were equally suitable as trustees.  If we all voted for them randomly because of that the votes would be less influential on the results than votes concentrated on a subset of them.  The vote of just a tenth of the electorate will always have a subdued affect on the overall result, but good use can be made of it.

Other additions to the website since the previous newsletter are:

Underfunding, closure, and termination. - about bad things that can happen to a scheme.
Members' Report and Annual Report comment - some antidote to the corporate slant.
The Trust says in "Its Your Pension" - provides illumination on a document you will have received.
Information for employees - Pensionable Pay - the formal rules.

Newsletter 12 noted the arrival of the Pickering Report http://www.dwp.gov.uk/publications/dwp/2002/pickering/report.pdf and the all-party Commons Select Committee on Work and Pensions.  AMIPP is a member of the Confederation of Occupational Pensioners Associations (COPAS), and COPAS has provided input to the Select Committee.  You can view it at http://www.copas.org.uk/copsel3.doc   The thrust of the submission is that failure to consider the consumer has contributed to the current crisis and that the Pickering Report ignored the important consumer agenda.  This is hardly a surprise.  Mr Pickering is a past chairman, and current director, of the National Association of Pension Funds (NAPF http://www.napf.co.uk/ ) which is an organisation of the providers of pensions, with no category of membership for consumers.  His team of seven was similarly motivated - IBM provided one of them. 

[ Like government activity and pension provision activity, most COPAS activity goes on in the South.   If you live further North you might welcome the opportunity to participate in a meeting near junction 16 on the M6.  It is on Wednesday November 6th and the subject will be "The Future of Pensions in the UK". Contact AMIPP or the organiser Bernard@pottacct.freeserve.co.uk for details. ]

There are no legal points in this newsletter on the narrow issue of introducing the M-plan.   Across the country, pension scheme members are attempting to assert their rights in various ways.   The Caparo affair is pertinent.   Caparo announced it was closing its final salary scheme.  The workers objected.   The owner warned that strike action by Caparo Automotive workers would leave him no choice but to put the division into liquidation.  There were a series of one-day strikes.   The Iron and Steel Trade Conferation, which represents some of the workers, negotiated for continuation of the final salary scheme, with some changes.  Both parties eventually declared themselves satisfied, a final salary scheme was retained, and the strikes stopped.  Although Caparo is good news from a consumer protection viewpoint it was not achieved by the Ombudsman or the Courts.  It adds substance to the view  expressed from time to time on our message board, that clout works and the regulatory mechanisms do not.

The Secretary of State for Work and Pensions, Andrew Smith commented on Caparo: "Our reform of occupational pension schemes will listen to workers up and down the country - like those steel workers at Caparo - who understand that pensions are every bit as important as wages"  "It must be right that good employers take their responsibilities seriously and don't cut back on pension provision in good times only to find that the money isn't there when it is needed."  If this marks a change from the decade when the Department of Work and Pensions (DWP/DSS) took its lead from NAPF, it is welcome news.

The new Ombudsman, David Laverick, has produced his first annual report.   You can read all his words at http://www.pensions-ombudsman.org.uk/publications/docs/AnnualReport2002.pdf.   He says "There would have been no need for Parliament to have introduced (and later endorsed) the concept of ombudsmen in this country if all the ombudsman was expected to do was to provide remedies of the same kind and in the same way as the courts. The expectation was that the ombudsman would provide remedies in situations where one party, although acting lawfully had nevertheless acted unfairly or unreasonably."  Since courts in the 90's took a different view, and quashed Ombudsman efforts at protection which were not couched as following existing law, this Laverick viewpoint must be a concern for companies that operate on or just beyond the margins of the law (does that sound like New IBM?).

There is one legal case in progress that has a new twist on the "use of surplus" issue.   Different trust deeds cover a spectrum of positions on the employee/trustees power balance (with IBM's at the extreme in giving power to the company and thus preventing the trustees protecting the members).  Such differences between trust deeds are a problem since members don't see the deeds when they are buying their pension so do not know what security they have.  The Ombudsman has suggested requiring every trust to use one of a small number of standard trust deeds.   Meanwhile, the John Holt pension scheme (owned by Lonrho) has deeds at the opposite end of the spectrum from IBM's - their deeds give the trustees "absolute discretion" over benefit increases and do not allow for a refund to the employers.  In a rare reversal of the usual cases where members maintain that more surplus should come to them, in this case the John Holt trustees and members are on the same side, while Lonrho are pursuing a modification order (as in the Thorn case  ) in an effort to get some of the surplus paid to them.  Of course we don't know if there will still be a surplus by the time the case gets resolved!

Over a period, AMIPP has lost contact with a number of people, listed in Lost Members.  They might have changed their email address and not told us, or they might have lost their jobs and no longer have an email address. If you can help by reminding them of the need to re-register, or by being an "e-mail buddy" for them, please do.

AMIPP, the Association of Members of IBM UK Pension Plans       www.amipp.org.uk