UK – Computer giant IBM made a 19% return on its UK pension assets last year, according to a pensioner website.
The Association of Members of IBM UK Pension Plans cited IBM Pension Trust manager David Newman as saying the trust’s investments made a 19% return in 2005, compared to 12% in 2004.
Newman “explained that current lower interest rates, coupled with people living longer, had increased the amount the actuary calculated would be needed to maintain the final salary plan and that IBM had decided to reduce the benefits”.
Newman also noted that the £500m that the company had paid into the fund was expected to lead to the deficit being extinguished.
IBM proposed a wide-ranging set of changes to its UK pension arrangements earlier this year which included the cash injection.
Trustee chairman Jim Lamb said in a letter to all defined benefit members of the IBM Pension Plan that the changes included reducing the rate of growth of pensionable earnings for current employees who choose to remain in its DB plan and allowing current employees to transfer to a defined contribution scheme.
The firm will also reduce the level of pension in payment increases below established practice but guarantee that increases will be awarded annually for the next 15 years.
Lamb said: “IBM has advised the Trustee that the IBM Pension Plan in its current form is too expensive to maintain and that it needs to take action now to reduce the cost of pensions if it is to be competitive in the UK marketplace.”
The letter said that the trustee had agreed in principle to the changes, after legal and actuarial advice.