UK roundup: IBM, UK Court of Appeal, Northumbrian Water, GMB
IBM has told US financial regulators it expects to write off $250m (€226m) should it lose an appeal court case against its UK pension scheme trustees and members.
The case, ongoing since changes to the scheme were made in 2009, is set to be heard by the UK Court of Appeal, with a verdict expected next year.
The case relates to allegations that the computer giant made misleading statements and breached its duty of good faith when closing the defined benefit scheme to future accrual in 2009.
However, in 2014, after four years of litigation, the UK’s High Court ruled in favour of the trustees and members, arguing that IBM misled members in consultation and failed to meet its legal duties.
IBM appealed the Court’s judgment.
However, in filings with the US Securities and Exchange Commission, IBM said: “If the appeal is unsuccessful, the Court’s rulings would require IBM to reverse the changes made to the UK defined benefit plans retroactive to their effective dates.
“This could result in an estimated non-operating one-time pre-tax charge of approximately $250m, plus ongoing defined benefit related accruals.”
In other news, Northumbrian Water Group is facing potential strike action from members over changes to its pension fund.
Hong Kong group CKI owns the company, which supplies water to the North East and South East of England.
CKI has proposed closing the final salary scheme and shifting to a career-average arrangement, moving indexation from the RPI to the CPI.
According to trade union GMB, the scheme currently has a deficit of £153m (€215m).
CKI, however, has since come out with a figure closer to £270m.
The GMB said CKI’s proposed changes had nothing to do with the deficit but were aimed purely at maximising profits.
If the company fails to produce an improved offer after August, the union will ballot members over strike action, it said.
The GMB’s Maxine Batholomew said: “The company claims the current final salary scheme is unaffordable but has failed to show [figures] to back up its arguments.
“CKI gave the trustees [the impression] it was fully committed to fully safeguarding pension entitlements, [but] it is just wallowing in greed.”