Dear [MP],
You may recall that
[Constituent], and maybe other constituents, wrote to you on this matter. This letter is an update for the sixty
Members of Parliament that we know have been similarly contacted by concerned
constituents. The Association of Members of IBM UK Pension Plans (AMIPP) is a group
of IBM pension fund members organised for the benefit of the 36,030 members, of
whom approximately two thousand have already registered at our website - www.amipp.org.uk
Up until the recent publication of "Action for Occupational Pensions" the forefront issue was scheme windup, by both insolvent and solvent companies. The first problem was exemplified by Allied Steel and Wire, where the scheme was nominally in reasonable shape according to Minimum Funding Requirements but some employees got less than half the pension they had earned. The Pension Protection insurance scheme will prevent a repetition of this, although it is not retrospective. The second problem was exemplified by Maersk, a profitable foreign company which is winding up a UK pensions scheme to save money, leaving the scheme members with less pension than they have earned. The new "buy-out" requirements will prevent a repetition of this, although they are not retrospective.
These two measures will help to restore public confidence. We all recognise that there is more that can be done. The highest remaining priorities are issues of pension promises, Member Trustees and regulation.
A question was
recently asked in the Commons about "what
happens when the trustees cannot act in the interests of the employees because
they are effectively stooges of their management?" Scheme members are in a weak position when
they suspect this situation. The Thorn
scheme members were able to prevent £50M being abstracted from their funds for
the benefit of Nomura, the current employer involved, because they had "pro
bono" legal support, but this was unusual.
The Ombudsman mechanism needs strengthening. You will know from the Green Paper responses
and our previous update www.amipp.org.uk/westminster/mp4.html
about the difficulties the Ombudsman has with resources and with the
Courts. Rulings in favour of scheme
members can be changed in the Courts by legal teams paid for out of scheme
funds or corporate budgets whereas rulings in favour of corporations cannot in
practice be challenged, so an empowered Ombudsman is essential. In his remarks on to the Select Committee on
pensions, the Ombudsman said "I would be
helped by an indication from Parliament that it does indeed intend the Pensions
Ombudsman (like other Ombudsmen) to investigate and provide remedies for
maladministration even though the acts of maladministration might not be
regarded as unlawful by the Courts or the same remedy may not be available by
way of legal action". In oral
evidence he put this as "I do feel the
need for rather more armour around me".
The Member Trustee mechanism needs strengthening. The purpose of Member Trustees is to "give members more influence in the running of their schemes", as the Minister said when such trustees were introduced. Member Trustees are a valuable adjunct to regulations because they can snuff out problems at source, before they become problems for the regulators. There is not yet a commitment to Member Trustee selection that is enforced as open, fair, documented and free of company vetoes.
AMIPP asks that
you aim to focus party policy on those priority consumer protection needs.
When they gave their work in return for a promised
pension, the IBM UK scheme members were told of an aim to provide them with "competitive" protection against
inflation. They have received the worst
pensions-in-payment policy of any comparable scheme. This occurred under the control of an IBM US CEO who viewed pensions
as an "old-fashioned" benefit. Changes to the regulator and regulations
may not benefit these members, any more than they will benefit the ASW and
Maersk members, but changes could
prevent a repetition of the IBM affair.