Trustee Announcement to Defined Benefit members (including Enhanced M Plan ex C Plan members) 4 August 2010

ANNOUNCEMENT TO EMPLOYEE MEMBERS OF THE DEFINED BENEFIT SECTIONS OF THE IBM PENSION PLAN AND EMPLOYEE MEMBERS OF THE IBM IT SOLUTIONS PENSION SCHEME

On 28 October last year I updated members on the changes the Company proposed to make to the retirement benefits of DB members. On 30 November I also updated C Plan members (including Enhanced M Plan members who transferred from the C Plan) of an issue that had arisen concerning their early retirement rights. Now is an appropriate time to update members on the current status. 

Company Proposals

In my last announcement to members I informed you that following the announcement of the Company’s final proposals in October 2009 the Trustee, following a careful review, would be prepared to amend the Trust Deed and Rules only after it had obtained the sanction of the Court. Further that the Trustee would be seeking confirmation from the Court that the Company has acted in good faith and that future service proposals meet the legitimate expectations of members. I also indicated that these were important and complex issues that required careful consideration and analysis on the part of the Trustee and that it may therefore take some time to formulate an application to the Court. 

Since that time the Trustee and its advisers have been working extremely hard to bring these matters before the Court.  As you will be aware the Company initiated court proceedings at the end of May 2010 and informed employees at the time of their action.

The court proceedings will involve other parties in addition to the Company and the Trustee. These are known as “Representative Beneficiaries” and their role, through their advisers and counsel, is to represent the interests of members. There is one Representative Beneficiary for the IBM Pension Plan and one for the IBM IT Solutions Pension Scheme.

On 28 July the Trustee submitted its evidence to the Court. It is anticipated that the evidence of the representative beneficiaries will be submitted by the end of September. Although a date for the court hearing has not yet been established, the Trustee is very keen to bring these matters to a conclusion as soon as possible in order that the Trustee knows definitively how to administer the plans and that members have certainty regarding their future retirement benefits.  

The 1983 C Plan Issue

You will recall that a further issue emerged during the latter part of 2009 concerning the introduction of the C Plan in 1983 and whether or not the intention was for members to have the right to retire from age 60 without requiring Company consent and without actuarial reduction. The Trust Deed and Rules do not reflect this “right”. I outlined the background to this matter in my 30 November 2009 announcement to members and indicated that the Trustee would be considering whether or not an application should be made to the Court to clarify the situation. 

In December 2009, the Company announced that they had decided to make an exception to the new Early Retirement policy for those active C Plan (and Enhanced M ex-C Plan) members who joined the C Plan from the N Plan on 6 July 1983, and those members that joined the C Plan up to 30 November 1983 when the revised employee handbook was issued. These members, if they remain in employment with the Company, may at any time before closure of the C Plan in April 2011, request early retirement from the Company.  If this request is made on or after a member reaches age 60 the Company will give its consent, other than in the most exceptional, business critical, circumstances, and no Early Retirement Discount Factor will be applied. The Company has said that post April 2011 the same criteria will apply if the Trustee agrees to the “hybrid-deferred” status of members.

Notwithstanding the above announcement by the Company, the Trustee has continued to investigate the circumstances surrounding the introduction of the C Plan in 1983 and continues to believe that the contractual and rectification arguments outlined in my November 2009 announcement merit submission to the Court. It is intended that an application will be made to the Court by the end of September.

Conclusion

The Trustee appreciates the great importance of these matters to members and understands that members may well feel frustrated at the time it is taking to have them resolved. However, these are complex and challenging issues and the Trustee must ensure that all relevant questions and related evidence are brought before the Court for consideration In order to get clarity on how properly to administer the schemes.

The Trustee will update members again as soon as it is in a position so to do.

James S Lamb
Chairman
4 August 2010

 

Back to latest news

Last Updated: 28/10/2010

You are here: > General Information > News > News Archive