21 Jan 2004

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, although we believe a determination is imminent.

More has emerged recently about judges (who resent somebody who is not a judge making judgements) sidelining the Ombudsman.  Three more cases where the Ombudsman's determination found in favour of the member have been changed on appeal.  It is a curious fact of our legal system that the Ombudsman's decisions can only be appealed on the basis that the Ombudsman got the law wrong but the Ombudsman has no right to be represented when some Court decides.  All of this feeds AMIPP's concern about pragmatic pressure on the Ombudsman's Office to simply paraphrase input from the company/trust lawyers to construct a determination, thus avoiding challenge in the Courts (at the expense of members and of Parliament's intentions).

Although it will not bolster the Ombudsman in time for his determination of our complaints, there are suggestions in the pensions press that the forthcoming Pensions Bill will be more explicit about Parliament's intentions.  The words of the Bill are expected to be released in February, with a view to them being the law in Spring 2005.  This represents the current stage of a process that began with the Green Paper, consultation on it, and a paper "Action on Occupational Pensions", all of which are described on the website.  (Most easily found from the chronological listing in the News section).  In the Bill, the Ombudsman may be empowered/required to give directions that are "fair and reasonable".  If that became law it would reduce the prospects for company/trust lawyers using the Courts to obtain outcomes that were unfair or unreasonable.

With a determination imminent, it is perhaps worth repeating some points which have been made before, lest we expect too much information in the determinations:

- The Ombudsman will report his view on how far the law protects us.  He will address legality and illegality, not right and wrong.  The difference can be illustrated with the example of apartheid.  Most people believe apartheid was wrong but any South African who appealed to an Ombudsman, or any other part of the system, on those grounds in the 1970's, would not have had their appeal upheld - apartheid was the law.

- Determinations on only two complaints, out of five or more that reached the Ombudsman and 50-odd that reached OPAS, are expected.  The complainants have argued against pre-judgement without investigating the complete picture, unsuccessfully.

- The Ombudsman is not required to tell us what he did or did not investigate, or what documents and behaviours he uncovered.   Those that know more about the investigation than the determination says will not be able to reveal anything, because of confidentiality.

There have been no new articles added to the website since the last newsletter, but there has been an increase of activity on the messages board. The message count now exceeds two thousand but it must be conceded that many recent messages are "dross".  There are good reasons for allowing anonymity but that could be the reason we have seen so many personal denigrations, innuendos, and speculations about identities. You should note that the Webmaster treats messages posted by authors, who cannot be identified, as suspicious. Such messages may be regarded as being 'off-topic' and removed from the message board and not archived. At this point in time there are no plans to change the message board rules but we urge users to think about the rules and not to post information without an indication of the source.  We apologise for the recent increase of "noise" in the system.  The archives are organised by subject.  The filing by subject will not always match what you would have done if you were filing but reading the archives gives you the best chances of reading (mostly) what is of interest to you.

We have allowed a wide message board freedom in IBM topics like contracts won and lost, corporate governance, ethics, and job prospects.  Everyone (except IBM's competitors?) would like this to be good news but in practice it is mostly bad.  (Except job prospects for IBMers in India, China etc.). 

We have mentioned the bribery in Argentina in previous times.  There is now a recent case of bribery in Korea.  We have mentioned tax dodging in the UK.  (Do a find for "tax" at this link)  There is now a recent case in Japan. The Mainichi Daily News (Japan) and the Dow Jones Business News report that IBM Japan was forced to pay 1.5 billion yen in penalties and taxes for cooking the books in an income-hiding scheme.  The case involves one particular project, rather than an overall company tax return as in the UK - 1.5B yen is around £10M.  The Federal Communications Commission has upheld findings that International Business Machines and eight school districts in four states engaged in questionable bidding practices in pursuit of $251 million in federal telecommunications subsidies.  In recent archives you will find "Cancer-stricken former employees sue IBM" and "IBM US publishes 'doctored' Treasury Document?"  Newsletter 17 mentioned a Securities and Exchange Commission investigation of IBM.  There are now more.

The connection of all this to pensions comes because Armonk ethics drive both IBM worldwide corporate governance and the relation between what benefits earlier IBM management promised and what current management delivers.  Also a lack of trustworthiness eventually impacts sales to customers - IBM financial difficulties would put our pensions at extra risk.   (No overall difficulties are evident now - IBM fourth quarter profits were $2.7 billion)

Another theme from the message board is support for extra action (do a find for "action"), perhaps along the lines of those who stopped the traffic in Oxford Circus as an occupational pensions protest.  Provided message board rules are obeyed, those wishing to organise action amongst themselves can use the message board as a tool.  On balance, AMIPP feels that we should wait to be better informed by the Ombudsman before encouraging major action but there is one activity that could bear fruit now - asking questions.  Other companies, like Unilever and Shell, are better than IBM at providing the information that members need to assess their future.  Elected Trustees cannot report on what is going on.  If you don't ask you will not be told enough.  If you don't ask you provide ammunition for the view that there is no cause to communicate more to you.

Do you know what the C-Plan deficit is?  Do you know for how long there is planned to be a deficit? Do you know what employees and retirees and deferreds  would receive if the C-Plan wound-up now?  These are the sort of things you would be told of if you were in many other schemes.  Other things are relevant just to IBM.  Do you know why the C-Plan doesn't have a month of the year when cost-of-living adjustment is considered, whereas all other schemes do?  Do you know why you were told that the trustees requested "more" than the company delivered for the last adjustment but were not told the numbers that would allow you to judge the gap for yourselves?

You can ask pensions administration this sort of question or you can ask at a retiree club meeting or you can ask your manager.

If you have questions that are special to you, for example if you have been quoted transfer values that you find counter to what you would expect, you can ask pensions administration or can ask a trustee.   You are not making unnecessary work for others - they have made work for you by not providing enough communication in the first place.

If you learn anything (even if just how evasive this trust is), please let us know.  There have been a couple of occasions before when members have made their views known.  The dozens who wrote to OPAS will eventually learn from the Ombudsman.  The membership which elected trustee candidates who called for change in their election statements, and not those candidates who didn't, have sent a message.  If you feel communications are not what they should be, sufficient questioning might make a difference. 

There is recent Pensions Policy Institute research which says that 3/4 of those aged 75 and over are women - that is a national statistic and not a statistic for our scheme but it is a reminder about those who will suffer most from IBM UK's policy of eroding the value of each C-Plan pension over time.

You will have read of the Conservative party intentions to "restore the link", that is raise the State Pension in line with wages rather than prices.  The newspapers have had speculation about the cost of this, and the burden on employees when the ratio of employees to pensioners lowers.  Although the interaction with occupational pensions is not strong, many of us have an interest in the subject, and some good data from the Government Actuary may interest you.

We have mentioned  that the concept of Member Trustees chosen by members is under threat from proposed legislation.  The campaign to retain "fair and open" selection of Member Trustees is led by the national body that AMIPP is associated with, the Occupational Pensioners Alliance.  It is an encouragement that the Chairman of The Commons Public Accounts Committee has described trustees as "the first line of defence for pension scheme members".

The twelve Law Lords are to be re-organised into something like the Supreme Court in the US.  The youngest, and only woman, will be Brenda Hale. As a matter of interest rather than significance you might care to know that she is married to Julian Farrand.  Dr Farrand was the Pensions Ombudsman before the current one, and greatly raised the profile of that office.

There is a website that compares social security across countries.  The description for the UK is necessarily compact (and not completely current) but it provides an overview that is not easy to find elsewhere.  (Did you know that 15% of National Insurance Contributions are allocated to the National Health Service toward the cost of medical care?)

We mentioned in newsletter 15 the theories about why IBM US chose to remove the deficit in its pension fund all at once.  There is now evidence that the true answer is simply that the US tax system made it financially very attractive.  That could be the explanation of why the same has not happened to our scheme - the UK tax system is different.

There is now a link on our links page to a new organisation aiming to sue IBM US over benefits.  It seems to have got off to a good start and has a rousing rallying cry.

Finally a legal reference for those with an interest in how the law copes with difficult concepts like fairness and maladministration.  In one case where the Ombudsman had his determination set aside, the High Court decided he used the wrong sort of test of honesty. This reference is about how complicated the law makes the concept of dishonesty.  ("an honest person does not deliberately close his eyes and ears, or deliberately not ask questions, lest he learn something he would rather not know, and then proceed regardless.")