The issues here are not really about "What is age discrimination?" since a majority would agree on something like "Causing a loss of benefit or opportunity solely on the basis of birth date is age discrimination".  The issues are about what varieties of age discrimination are demonstrable and legally barred.  (You can go on a £704 one-day course and learn more if that suits you:-)

It is not uncommon in IBM to find two people doing essentially the same job to the same level but with different pension benefits.  If it turned out that the losers in such situations strongly tended to be younger then (according to the legal firm Mercer and others) that would be a case of unlawful "indirect discrimination".  Age discrimination can be against the young, just as sex discrimination can be against men.

The date when these regulations apply is almost upon us.  Can it be that the effects are as minimal as IBM has announced?  Or does IBM not know what it is going to do?  Or has it chosen not to tell us?

Consultation in advance matters more because correction afterwards is so difficult.  An employee who thought they were a victim would find it nigh on impossible to collect the statistical evidence necessary for demonstrating "indirect discrimination".  The hassle and cost of going to a tribunal would be disproportionate to the potential gain for the individual.  (Similar problems prevent us finding out if the extrapolation of the South West Trains case,  discussed in Newsletter 31, was lawful.)

Some trusts have found themselves in a difficult position over MNTs.  (MNTs are Member Nominated Trustees, the equivalent of our Member Elected Directors).  There is more explanation available, but the short story is that most MNT/MEDs will shortly cease to have that status (although they might remain trustees).  That makes a difficulty because 1/3 of trustees have to be formal MNT/MEDs.  So if the current MEDs remain but are not formal MEDs there have to be new MEDs to make up the 1/3.  It would appear that the origins of our election arrangements will cause this problem to arise for our Trust.  We should assume that our trustees acted honourably when they called for candidates to serve for three years and hence that the legal advice they got at the time was wrong.  In passing it is worth noting that the government still intends to change that 1/3 proportion to 1/2 by 2009.

Our election arrangements are good compared with some other schemes - some have no elections at all.   A Single Transferable Vote system (if unconstrained by sectional quotas) ensures that composition of the group elected is proportionate to voters' views.  However, the fact that there have to be new arrangements provides the opportunity to consider improvements.  Removing age discrimination against candidates is an obvious improvement.  Including the deferreds in the process would improve fairness - deferreds gain from a well run trust just like other members.  (The argument against deferreds is one of cost - adminstrators like to be in a position where failure to keep track of peoples' addresses between when they leave IBM and when they take a pension has little impact.)  If the composition of an elected body reflects the demographics of the electorate that is an election side effect with merit.  But it doesn't justify waiting until the votes are in and then disqualifying some successful candidates on the basis of the composition the authorities would like to see.   The current IBM election constraints have that nature.  They are disrespectful to the electorate because they assume the electorate does not know best.  They are disrespectful to the candidates because they suggest that MEDs will press sectional interests even though they have a duty to treat all the scheme members equitably.  We are now waiting to see if the new arrangements that the Trust will introduce are an improvement or not.

The plight  of pensioners not covered by the Pensions Protection Fund has been described in previous Newsletters.  Positions have hardened, with no sign of compromise.  The government says it has done enough for these 125,000 victims and that there is no disrespect in ignoring the Parliamentary Ombudsman's verdict that they should do more.  Almost everyone else wants more done, with the simplest solution being to bring the 125,000 into the Pension Protection Fund scheme.  (Along with some public finance so that firms do not have to pay a bigger levy to the PPF).  The Union-backed appeal to the European Court of Justice looks set to fail but the judicial review in this country is less predictable. (That hearing is on 7th of Feb 2007). This link attacks government "half-truths". Others have used "worse than Maxwell" and "a constitutional crisis" terms.

The role of Unions in pensions matters has been highlighted by British Airways affairs.  You can compare with IBM's approach to scheme changes. BA's scheme members get to know what is going on before it is too late to change.  The trustees held mass meetings to give members information.  The members know of an initial proposal (rejected by trade unions) for a one-off payment of £500M into the fund in return for staff working longer and agreeing to a cap in their pension benefits.  Members have been told about PriceWaterhouseCooper's advice to the company about how much it should afford.  There is now a different proposal.  There is currently no final agreement but when there is agreement it will have been negotiated by the unions as well as BA's pension trust.  Whether you think that is a good thing or not, you probably think that having members understand the balance of issues is a good thing.

Here are some bits of information just because you might be interested.

a) Many of us were dissatisfied with the quality of the Pensions Ombudsman's Determination of the complaints about earlier Trust and IBM behaviour.  Nothing could be done because of the cost of a High Court challenge.  The Ombudsman has acknowledged the general risk of injustice when expense prevents court action.  A poll commissioned by the Ombudsman shows that we are not alone in doubting the Ombudsman's independence in practice, where challenge-avoidance is a potential reason for not upholding complaints.  The majority of users of the Pensions Ombudsman mechanism think he is not independent.  Some details are in a submission to the Department of Work and Pensions website, item 36.  The submission also says what AMIPP has suggested as a solution.

b) The Office for National Statistics, Aug 2006: "82% of the over 65s have never used the Internet".  IBMers are a special case, but this number emphasises the difficulties in getting information to retirees.

c) A couple of reports put the "public sector pensions liability" at over a trillion pounds. (£1,000,000,000,000).  That is roughly the money that will have to be found, over the future, to pay the pensions of public sector employees, unless public sector schemes are degraded.

d) There has been movement on the IBM court cases in the US.  In summary, the latest judge to rule has said that less of the plan was illegal than the first judge said. Unless yet another level of judgment overrules that, IBM will be paying out $318 million to those damaged, as opposed to $1.7 billion if the first judge's opinion had prevailed. (See the green bits in this link)

There is no direct relevance to the UK because of different regulations, plans, lobbying, political appointment of judges, etc.  As in the UK, the issue is not so much age discrimination in the English-language sense but is an issue of what varieties of age discrimination are illegal.

An extra $1.4 billion in IBM's coffers (at the expense of some US retirees) might be regarded as a plus for IBM stakeholders generally. That IBM has trimmed the cost of operating on both sides of the margins of the law might be bleak news for those concerned at IBM breaking/stretching the law elsewhere.

In a different US legal development, a judge has ruled that some "waivers" signed by IBM employees when they were laid-off do not prevent those people bringing lawsuits alleging age discrimination. (The waivers were intended to stop that and IBM got people to sign them by offering a lesser financial deal to those who wouldn't.) Some 20,000 past employees are potentially affected. 

 

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