UK - Schemes are awaiting the result of the dispute between computer giant IBM and a former manager of its £4.3bn UK pension plan, a clash which could result in a landmark decision by the pensions ombudsman on the use of fund surpluses.
The former manager claims IBM pensioners were given average annual rises of 70% of the Retail Price Index - even though the scheme enjoyed a large surplus and regular contribution holidays. The case is due to be settled shortly having been awaiting a determination since September 2000.
It is uncommon for disputes to take more than a year to be processed. But pensions ombudsman office spokesman Tony King said: Matters relating to surplus tend to be more complex because they relate to the scheme as a whole.
The ex-manager said he was aware that many of the legal arguments and precedents on surplus favoured IBM but he hoped the publicity surrounding the case would encourage the computer giant to see sense and make an improved offer to IBM pensioners.
Legally they have not done anything wrong but morally I think they have, he argued. The ombudsman was the only sensible route we could take to make our complaint as public as possible.
A second case is also being brought by another IBM employee who is unhappy that IBM's surplus on its defined benefit scheme - evaluated as £700m in 1999 but thought to have fallen sharply since - has been used to fund a new defined contribution scheme.
The employee has claimed that members in the new scheme were not made aware that IBM had failed to pay any employer contributions to the plan since 1997, relying instead on a transfer from the surplus.
A leading pensions lawyer commented: In general principle, the two parties have got a tough time ahead unless they can show the trustees have been negligent or there is a special rule saying they are entitled to the money.
The lawyer said the employee might have a case if it could be shown that the trustees had not thought the issues through and taken proper advice.
By David Rowley
This week's edition of Professional Pensions is out now.
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