UK – Fears have emerged that computer giant IBM may decide to sell its £4.9bn (€7.2bn) UK defined benefit pension plan now it has returned to being fully-funded.
The concerns have appeared on a fund members’ website and follow the publication of the IBM Pension Plan’s 2005 report, which stated that “in broad terms the plan is now estimated to be fully funded”.
This follows more than £900m in special contributions to erase a funding shortfall of a similar size as well as strong investment returns.
The concerns come as several new companies have been launched in the UK specifically to take over defined benefit pension funds from corporates. One posting to the site specifically refers to the fund possibly being “off-loaded” to “some other provider”.
“They might have to wait until after the official review at the end of the year, but watch this space,” the post states.
A spokesman for IBM in the UK declined all comment on the members’ worries.
As earlier reported by IPE, the fund returned 19.1% last year, the members’ report states – adding the fund is now on a “very strong financial footing”.
And it has also emerged that the fund is shifting away from equities towards fixed income.
“By the end of 2007 the intention is to increase the proportion of bonds to 35% from 28.6% at the end of 2005,” the members’ report states.
And the scheme will cut its 55% exposure to UK equities to 30% - raising its overseas equities allocation to 70% from 45%.
The fund will undergo a further investment review “during the latter part of 2006”. This would “take into account the recent changes to benefit levels and the improved funding position following the cash injection”.
Earlier this month IPE reported that opposition from employee representatives had forced IBM in Germany to temporarily halt plans to transfer half of its employees from a defined benefit pension scheme to a defined contribution one.