Here are some things within the "It's your
pension" document (from the Pensions Trust, August 2002) that are worth
The final sentence of section with dark green heading says
the trustees "have a responsibility to act fairly and equitably
towards all pension plan beneficiaries and, therefore, have
responsibilities identical to those of the other Trustee Directors of
the Trustee Board."
Nobody quarrels with the main sense of that, but there is contention
about what the word "all" means in that context. Does it
mean all and only the current members or does it mean the current
members plus the people that might (or might not) be members in the
future? This is a question we can hope to get guidance on
from the Pensions Ombudsman.
If you take the "current members only" point of view, then the
trustees misunderstood their role when the M-plan was introduced.
See Dave Reid's analysis from the early
If you take the "current and future in all plans" point of view then
it is possible to argue some element of balance in the introduction of
the M-plan. The C-plan members suffered from a new way of
taking money out of the C-plan reserves. The M-plan members
suffered because the M-plan is worse than the C-plan. Some
thousands of Fixed-Term-Contract employees gained because they were
eligible for the M-plan. (We don't know why the latter were not
eligible for the C-plan.) So it could be argued that the benefit
to the potential new members balanced the detriment of the other
members. (Although it should be said that the
responses to the complaints
which are on this website do not contain that argument.)
The section with a Burgundy heading says "Under the Trust Deed
and Rules, the Company has established pension plan members' benefits;
the responsibilities of the Trustee Directors do not encompass
determining or negotiating these benefits."
There are a number of partial truths bound up in this sentence.
The deeds do establish some characteristics of the benefits, but only
some of them, and those can be changed by amending the deeds. The
trustees do control amendment to the deeds.
Where the deeds do not address a benefit characteristic, that
characteristic is determined by the bargain between the employers and
each employee during the time they were employed. In IBM's case
the deeds say nothing about Pension In Payment (PIP) policy (other than
allowing for reviews of increases "from time to time") so that
characteristic stems from the bargain. This was expanded on in
our comments on the document you received in
The issue of trust involvement in "determining or negotiating"
is one of the meaning to be attached to those words. The 1994
Actuarial Report says
"The allowance for future discretionary increases to
pensions in payment is to enable the Trustee and the Employer to
continue their discretionary practice of periodically granting
increases to non GMP pensions in payment."
That might sound to you like a joint effort, but it is
reasonable to argue that the Trustee does no "determining" because IBM
U.S. has the final signoff on increases. (Although Unions talk
about "negotiating" salary increases in circumstances where the company
has the final signoff, they don't talk about "determining" them.)
The word "negotiating" is open to interpretation. (For
example, do you "negotiate" with the family about where the family goes
for its holidays?) The Trust and IBM have an ongoing relationship
involving many decisions. The Trust has some powers, IBM has some
powers. On a particular decision, the Trust has an obligation to
take into account relevant previous outcomes.
Some judges have talked about negotiation when it comes to
the use of "surplus":
"The consent of the employers would be obtained by
negotiation. In those negotiations the employers could be
expected to have regard to their own interests - which (in turn) could
be expected to include a desire to maintain good relations with their
employees - and the trustees would be required to negotiate on behalf
of the employees, pensioners and their dependents." (Legal
reference  4 All ER pp 546- 582)
However, we know that in
Trust Law a different judge, looking at different deeds, might see
Undoubtedly the Trust provides input to IBM with the intention of
influencing IBM (why else do it?) and IBM communicates its plans and
potential plans (eg about salaries) to the Trust with the intention of
influencing what the Trust does. Whether the interplay of these
exchanges over time amounts to "negotiation" is a word choice.
Also in the Burgundy section is the statement that a trustee when
reaching a decision should not take into account their personal views.
Some might say that the reason they are there is to bring to bear their
personal view after taking all factors into account. Is
some distinction being made between "personal" views and "individual"
The first paragraph from Jim Lamb says "The requirement was for
one third of the Pensions Trust Board to be made up of MEDs:..."
The words in the 1995 Act are "at least one-third of the total
number of trustees"
You may think it is obvious what that means - that the total number
of trustees must not exceed three times the number of MEDs.
The regulatory body, Opra, has given guidance that that is the
interpretation of the Act to be made.
However, the Articles of Association of the Pensions Trust have a
different view of what one-third means. They say:
"A minimum of one third (rounded down to the nearest whole number)
of the Directors shall be Member Elected Directors unless there is a
lesser number of persons to be appointed as Member Elected Directors
under the Selection Arrangements or a vacancy or vacancies shall have
arisen in their number which shall not have been filled."
By that rounding down rule, 3 elected directors amongst a total of
11 would be acceptable.
This is hardly a practical concern to us, since the 4 amongst 12 has
been repeated often enough to be an obligation. However, it
does illustrate IBM's determination to have every possible little legal
edge over the members.