The promises made in DB schemes can be changed retrospectively ....

uk1

PeacefulWaters wrote: »

It is of interest. It's just your definition of the word retrospective seems a bit off.

I don't see why.

If you have left a company DB scheme and have a deferred pension that future pension is set in stone. Whilst a cash transfer value might fluctuate the actual pension can only be increased by any increases announced. Until this judgement it couldn't go down except with the consent of the member.

If they change what you will receive in the future that is a retrospective devaluation of a pension you have already earned and purchased. It is also in breach of the very clear trustee deed documents which prohibits such changes.

Do you not consider that a retrospective change then?

mgdavid

uk1 wrote: »

I don't see why.

If you have left a company DB scheme and have a deferred pension that future pension is set in stone. Whilst a cash transfer value might fluctuate the actual pension can only be increased by any increases announced. Until this judgement it couldn't go down except with the consent of the member.

If they change what you will receive in the future that is a retrospective devaluation of a pension you have already earned and purchased. It is also in breach of the very clear trustee deed documents which prohibits such changes.

Do you not consider that a retrospective change then?

No.
The pension at NRA is unchanged.
Pensions already in payment, whether after NRA or indeed taken early, are unchanged.
What has changed is the commutation factor in future for taking the benefits early - which of course is entirely the choice of the individual.
You appear to not understand the true meaning of retrospective - that is not semantics.

uk1

mgdavid wrote: »

No.
The pension at NRA is unchanged.
Pensions already in payment, whether after NRA or indeed taken early, are unchanged.
What has changed is the commutation factor in future for taking the benefits early - which of course is entirely the choice of the individual.
You appear to not understand the true meaning of retrospective - that is not semantics.

I am old enough to know when someone is arguing for the sake of it. And you have form.

The early retirement factors are in the trust deeds. They are (or were) set in stone. The deeds say they cannot be changed without the consent of the member. The increase of the early retirement factors for those in deferral for most sensible people is a retropsective change. It reduces pension already earned.

Anyway .... you have it your way .......;

hyubh

It basically found that promises made that most people would feel they could rely on and were contractual, were not contractual and couldn't be used against a company as evidence of a breach of contract or trust.

You make it sound like guaranteed early retirement factors is/was a normal state of affairs in DB, but it neither is nor was.

Most employees take in good faith promises made by the employers with respect to the pensions they have already paid for.

That's a rather dangerous line of argument! On what basis do you assess that generous ERFs have 'already [been] paid for'...?

https://www.sackers.com/publication/court-of-appeal-decision-in-ibm-v-dalgleish-and-others/

Project Waltz ... contained five key elements... [4] a new early retirement policy from April 2010 under which, save for “exceptional circumstances”, early retirement would only be allowed on cost neutral terms

As you're appealing on moral as much as legal grounds, I'm not sure this is really the issue to die in a ditch for. What's unreasonable about getting an early retirement on 'cost neutral' grounds only? The concept of an employer-funded early retirement won't even make sense for younger employees with DC pension rights only.

Are the historic trust deeds in question freely available, out of interest...?

uk1

hyubh wrote: »

You make it sound like guaranteed early retirement factors is/was a normal state of affairs in DB, but it neither is nor was.

That's a rather dangerous line of argument! On what basis do you assess that generous ERFs have 'already [been] paid for'...?

As you're appealing on moral as much as legal grounds, I'm not sure this is really the issue to die in a ditch for. What's unreasonable about getting an early retirement on 'cost neutral' grounds only? The concept of an employer-funded early retirement won't even make sense for younger employees with DC pension rights only.

Are the historic trust deeds in question freely available, out of interest...?

To be clear, I am not interested in arguing with you. I am not concerned whether this is of interest to you or not, but I'll just state the obvious and draw a line. If you wish to improve your knowledge on the topic because it is relevant by all means consult some of the records. I am not, as you presume affected by this because I have already retired. I am simply concerned that others understand it and think it relevant or not to their own circumstances because most DB schemes are under pressure.

But to state the obvious. The rules of the scheme are set out in the trust doscuments they are of course available to scheme members. Within the documents it lays out what the Early Retirement Factors are. Based on those set figures when members left IBM before normal retirement age they were offered in writing several options. A cash transfer value of their pension to their new scheme. An immediate pension if they were over 53. And a set pension at each age upto the normal retirement age. It obviously gave the exact amount at each age because there were no variables. It didn't state as a State Pension forecast might state that it was liable to change because there were no factors at that stage that could be changed. Everything is fixed at a moment in time, with the exception of any increases. There was the final salary computation. There was any early retirement factors. The ERFs were set in stone and the deeds said they could not be varied without the employers or ex-employers copnsent. The trust deeds states:

(c) no such alteration or modification shall be made which, in the opinion of the Actuary, would operate substantially to prejudice the pension payable to any Member or other person who is at the effective date of such alteration or modification entitled to a pension under the Plan ...

(e) no such alteration or modification shall be made which in the opinion of the Actuary would operate to reduce the aggregate value of the retirement benefits payable under the Plan to any Member not being at the effective date of such alteration or modification entitled to a pension under the Plan in respect of contributions already received by the Trustee except with the consent of any Member affected by such alteration or modification;

As the document you are given is calculated based on your final salary as you leave (which is what it is) and the early retirement factors are set out in the trust deed and cannot be changed without your consent, then until this second judgement most scheme members presumably in most DB schemes presumed that these were not forecasts contingent on any unknowns. They were all knowns and all laid out clearly within the trust deeds and therefore something you could safely rely on.

Judge Warren agreed entirely with that view ie that the deeds said no changes could be made without the consent of employees and without a consultation, and so scheme members were protected by the basic belief that a company couldn't just tear up it's schemes deeds the basis of which contributions were made. The appeal judges overturned that decision.

My motive in posting this was to simply inform those that might have missed it and it's potential repurcussions on existing DB scheme members who are not receiving payment. I am not concerned whether you or anyone thinks this important or not, or arguing about semnantics, that is up to you.

If you wish to understand any more the court documents with all the evidence are public records, and you are free to think that this decision in the Appeal Court is either relevant or not as you wish.

RickyB2000

I thought for most DB schemes, early retirement was written in such a way as to be at the discretion of the employer. Was this scheme different? Was it a 100% guaranteed right? Even if it was, it is a future benefit and future benefits are not protected (as long as consultation etc happens - which it sounds like it wasn't), only accured benefits. So the question then is whether the early retirement rights were accured or were future benefits. However, in all the articles posted, no mention is given to breaking of guaranteed rights, only a discussion around whether 'no more changes for the long term' was legally binding on changes to future benefits. I wonder why the debate didn't focus on the guaranteed rights that were written in the contract, or were agreed to already have been accured? It suggests to me the rights were not guaranteed in the contract or were not considered to be accured by previous contributions. And clearly both sides agreed as this doesn't appear to have been an argument either side tried to bring (at least from those articles).

uk1

RickyB2000 wrote: »

I thought for most DB schemes, early retirement was written in such a way as to be at the discretion of the employer. Was this scheme different? Was it a 100% guaranteed right? Even if it was, it is a future benefit and future benefits are not protected (as long as consultation etc happens - which it sounds like it wasn't), only accured benefits. So the question then is whether the early retirement rights were accured or were future benefits. However, in all the articles posted, no mention is given to breaking of guaranteed rights, only a discussion around whether 'no more changes for the long term' was legally binding on changes to future benefits. I wonder why the debate didn't focus on the guaranteed rights that were written in the contract, or were agreed to already have been accured? It suggests to me the rights were not guaranteed in the contract or were not considered to be accured by previous contributions. And clearly both sides agreed as this doesn't appear to have been an argument either side tried to bring (at least from those articles).

Judge Warren rightly decided that the changes were imposed on employees without consultation. He decided that the deeds contained guarantees that could not be varied. He concluded IBM couldn't make the changes it had. The appeal courts decision is a public document which I do not intend to paraphrase, but basically it overturned those findings.

hyubh

uk1 wrote: »

To be clear, I am not interested in arguing with you. I am not concerned whether this is of interest to you or not, but I'll just state the obvious and draw a line.

What you think is 'obvious' is not so to others (including me!).

If you wish to improve your knowledge on the topic because it is relevant by all means consult some of the records. I am not, as you presume affected by this because I have already retired. I am simply concerned that others understand it and think it relevant or not to their own circumstances because most DB schemes are under pressure.

Huh? I haven't made any assumptions about yourself. If however you truly believe your appeal to morality regarding the ERF issue is sound, you are simply not in the 'real world' experienced by people for whom DC is the norm. I don't claim this to be good or bad, it's just how it is.

But to state the obvious. The rules of the scheme are set out in the trust documents they are of course available to scheme members.

But are they available more generally? That was my question...

Based on those set figures when members left IBM before normal retirement age they were offered in writing several options. A cash transfer value of their pension to their new scheme. An immediate pension if they were over 53.

You know, emphasising that sort of benefit is really not the sort of thing to garner sympathy from most workers under 40 - an 'immediate pension' from age 53 is really quite fantastical for contemporary sensibilities. Where's the money coming from? And whose money is guaranteeing it?

The trust deeds states:

no such alteration or modification shall be made which, in the opinion of the Actuary, would operate substantially to prejudice the pension payable to any Member or other person who is at the effective date of such alteration or modification entitled to a pension under the Plan

What should have happened in your view if the opinion of the actuary came to be that life expectancies have materially risen, for example...?

jamesd

If life expectancies rise, the expected result is a decrease in early retirement factors because each year early now has a lower effect on the lifetime cost of the pension. 1/35 being smaller than 1/30 if 35 and 30 are the new and old life expectancies.

Given the cost neutrality claim producing an increase it may have been found that early retirees had much lower life expectancies than average and/or that the original factors were deliberately over-generous to encourage early retirement.

AnotherJoe

I don't think there's any doubt that IBM have screwed over its employees, past and present.

Like most here though, I don't see any retrospective changes to DB pensions, and for the wider point, any case law that means that employers can make retrospective changes to DB pensions already accrued.