Sections

IBM modifies pension changes after UK member backlash

Related images

  • IBM modifies pension changes after UK member backlash

Related Categories

UK - Unite, the trade union, has claimed IBM will delay changes to their UK final salary pension scheme following a "backlash from thousands of employees", though argued the revisions do not go far enough.

The union claimed IBM is planning to close its several UK defined benefit (DB) schemes to future accrual for existing staff and to alter the terms of early retirement. The schemes were originally proposed to close from April 2010, but Unite said IBM has now delayed this by one year to come into effect from April 2011.

Other changes highlighted by Unite include "limited enhancement of company contributions to the defined contribution (DC) money purchase scheme for two years for those transferring and retention of current death benefit and ill health provisions". But the early retirement provisions are still expected to come into effect from April 2010.

However, as the 60-day consultation period on the changes draws to an end, Peter Skyte national officer for IT and communications industries at Unite, said: "The latest proposals, whilst modifying some of the detail and mitigating some of the impact in the short term, do little to alter the substance of the company's original proposal and still propose the closure of the DB pension scheme and replacement with a vastly inferior money purchase scheme."

In response, a spokesman for IBM said: "IBM is in a process of consultation as required by law during which time employees will have the opportunity to ask questions and send feedback on the proposals. It would be inappropriate to discuss further during this consultation period."


This is the second example of feedback from employees and unions resulting in modifications to pension proposals, as Barclays confirmed in August that the planned closure of its DB scheme to future accrual would be delayed from December 2009 to 1 April 2010. (See earlier IPE article: Barclays faces strike threat over DB closure)

In addition, it noted that following the "consistency of messages" from members in the consultation period a further £500m would be paid into the scheme to reduce the £2.2bn (€2.41bn) deficit; employee contributions to the Afterwork pension plan would be phased in and a cash payment equivalent to 5% of base salary in December 2009 would be provided to employees affected by the changes.

Elsewhere, Dairy Crest has confirmed that following a formal consultation with employees and representatives it intends to close its DB schemes to future accrual from 1 April 2010. (See earlier IPE article: Dairy Crest mulls pension future after buy-in)

In a trading statement issues yesterday the food company, which completed a second buy-in of pensioner liabilities in June 2009, said the consultation had been "satisfactorily completed" and that discussions with trustees would be concluded within the next two to three weeks, at which point it would confirm details of the transition arrangements to its staff.

Smiths Group has also revealed that despite actions to reduce its pension deficit from £464m to £339m in the second half of its financial year, "consultation is underway to close the DB pension plan in the UK" following a similar move in the US.

It blamed the growing pension deficit on falls in stock markets and asset values and claimed the "impact has been further exaggerated by the downward pressure on yields driven by government quantitative easing programmes".

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

Have your say

You must sign in to make a comment

IPE QUEST

Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

  • QN-2474

    Asset class: All/Large Cap Equities.
    Asset region: Global Developed Markets.
    Size: $150m.
    Closing date: 2018-09-25.

Begin Your Search Here