Newsletter No 15

23 February 2003 

A request:  If you are an "E-mail Buddy", please print this newsletter and give it to your buddy.

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 continue to believe that the complainants are disadvantaged by the administration of the Ombudsman's Office, which adopts a serial and fragmented approach to investigations and prevents complainants' from demonstrating a pattern in the Trust's behaviour.

Nations can be invaded because of their pattern of behaviour.   As Donald  Rumsfield said of Iraq - "It seems to me that what will happen is a pattern of behavior will evolve and then people will make judgments with respect to it".    The Lockerbie murderer was convicted on the basis of pattern, with the appeal court judges agreeing that: "In reaching its decision to convict the appellant, the trial court found that the evidence fitted together to form a real and convincing pattern".  Yet the administrators in the Office of the Pensions Ombudsman will not allow the complainants in the IBM affair to demonstrate maladministration through a pattern of behaviour.  The Ombudsman has said in response to criticism of the administrators:  "My directions are only concerned with correcting injustice and repetition or pattern, as you put it, would not seem relevant to that task".

Documents added to the website since the last newsletter are:

2002 pensions in payment surveys - recent surveys show IBM still the worst.

How to access your MP - some notes on various ways to contact your MP.

A letter AMIPP has sent to some MPs - relating the IBM affair to consumer protection in general.

AMIPP funding - expanding the FAQ answer about why there is no subscription, yet.

Here is recent noteworthy material on IBM, from the media, and about the law:-

Our pensions (for the majority of service) were numerically increased by 1.9%, which computes to 1.5% annual.  This is as  predicted on the website in November .  The erosion in value is 30% of the Retail Prices Index,  in accord with the actual mechanical  pensions-in-payment (PIP) policy of IBM.   (As opposed to the PIP policy that we were told we would get.)   We know of no reason why the interval since the previous change was 15 months.

IBM UK mailed an issue of "It's your pension" dated November 2002.   Although addressed to "Dear Pension Plan Member", it appears not to have been sent to retirees.   To a large extent it only affects employees since it is about "The amount of pension you would need to give up at retirement in exchange for tax-free cash" and "The amount of extra benefits you can buy at retirement using Additional Voluntary Contributions (AVCs)".

People retiring after the end of this financial year will be able to opt for the pension derived from their AVCs to be delivered with no increases, with Limited Prices Indexation, or in accord with "current practice"  (which for 15 years has been the 30% RPI erosion).

Because of these possible choices, the takeup of AVCs will influence the affordability of increases to existing pensions but it is difficult to predict the effect of that. 

IBM Canada retirees have started a class action.  It is essentially about broken pension promises.  We understand that they have obtained legal support without exposing themselves to high legal costs, which suggests those lawyers have confidence in their case.  (There is already a large class action against IBM US in process.  That one focuses on age discrimination in pension plan changes.)

The Daily Mail (City & Finance, Jan 2nd) said "US computer giant IBM has injected £2.4bn in cash and shares to make good the shortfall in its pension fund"

That caused confusion because it is nothing to do with our pension fund.   It should have read "Computer giant IBM has injected £2.4bn in cash and shares to make good the shortfall in its US pension fund."

That transfer of shares has removed an actuarial shortfall more quickly than the regulations required.  The US websites have commentary on why.  It is not clear how the shares are valued.  These shares correspond to shares IBM bought back from the public at a high price while executives were exercising their share options.  In the UK there are regulations about "self-investment" that would limit our fund from holding IBM shares. In practice our fund has negligible "self-investment".

IBM UK will contribute £79M to our pension fund in 2003.  There is no suggestion that this is an accelerated correction of the finances, as was the case for the IBM US top-up.

There is a lack of hard news about job losses at Greenock but "The Sunday Scotsman" has reported  what it knows.   This writes about "Fears of up to 700 job losses" but these may not technically be job losses - the staff are being sold to another firm, Sanmina-SCI, and that firm decides what happens to them.

There is a fairly new website that treats issues from the perspective of members of a scheme that was wound up.  In particular the Sunday Times article by John Humphrys, partway down, is illuminating.

The Government has produced a Green Paper and a couple of other documents about what will be in a new Pensions Act.  Links for these are at the bottom of our links page.  Anybody can comment directly to the Department of Work and Pensions (DWP).   If you want your view consolidated, you can comment to AMIPP, preferably by a website message.   AMIPP is a member of COPAS and will influence the full COPAS input to the DWP.   The COPAS website has an early response to the Green Paper.

The gist of the Green Paper is that many regulations will be done away with in favour of guidance notes issued by the regulators.  It is a matter of opinion whether this will strengthen consumer protection; much will depend on the behaviour of the people who sit on the board of the regulator.

The Law Commission is given tasks by the government to consider particular legal issues.  The Commission has produced a consultation paper about trustees and exemption clauses in deeds.  It points out that  "A typical trustee exemption clause may read as follows: No Trustee shall be liable for any loss or damage which may happen to the Trust Fund...at any time or from any cause whatsoever unless such loss or damage shall be caused by his own actual fraud." and that a court has held that a clause (similar to that set out above) could exclude the trustee from liability for loss or damage to the trust property "no matter how indolent, imprudent, lacking in diligence, negligent or wilful he may have been, so long as he has not acted dishonestly".

The Law Commission is concerned that this puts the beneficiaries in too weak a position.

AMIPP could make good use of a new volunteer to help with the maintenance of member records.  This involves technical work on website automation, done currently with CGI scripts.  Please contact the Webmaster  if you feel you could help, and want to.