back to article UK IBMers lose crucial battle in pension row

The Court of Appeal in London, England, has upheld IBM's appeal over the closure of its defined benefit schemes, which guaranteed retired employees a predefined portion of their final salary. It dismissed The High Court's 2015 ruling by Mr Justice Warren that IBM had not acted in good faith when implementing a series of …

  1. Anonymous Coward
    Anonymous Coward

    The senior managers will be drinking champagne

    "IBM was in breach of its contractual duty of trust and confidence when, having decided to consult with members, it deliberately withheld information and failed to consult with an open mind. The finding of breach of duty relating to the consultation therefore still stands following the appeal. "

    So that's ok. Deal in bad faith, withhold information, outright lie and suffer no consequences or penalties. Once again, there is no justice for the poor. This ruling gives the green light to legally further shaft employees.

    Stop the planet, I want to get off.

  2. Anonymous Coward
    Anonymous Coward

    So it was all for nothing then.

    " to maintain our competitiveness during the height of the 2008 financial crisis"

  3. Blotto
    WTF?

    Huge betrayal of trust

    That is a huge betrayal of trust and a huge kick in the nads for employees not just of IBM or in tech, but across the whole employment spectrum (except government).

    People would have turned down offers of employment from other employers due to the perceived strength of the IBM pension fund. To change the rules after committing to employment really is not fair.

    1. Alan_Peery

      Re: Huge betrayal of trust

      Some years ago I had to figure out if the two and a half years of accruals I had towards the five year minimum required for entitlement to the IBM DB pension was worth anything. I decided it wasn't, and made job choices accordingly.

      The world would be a more just place if the court had proven me wrong.

    2. Adam 52 Silver badge

      Re: Huge betrayal of trust

      "but across the whole employment spectrum (except government).

      ... To change the rules after committing to employment really is not fair."

      Not quite sure why you say "not government", unless you literally mean government ministers. George Osborne raised the public sector pension pot for civil servants, the NHS, Police and Fire in 2015. That's after Gordon Brown and John Prescott had already raided the Police and Fire pots a few years earlier in 2002.

      And yet the myth of gold-plated public sector pensions lives on.

  4. Nifty

    Wait for Royal Mail shares to shoot up

  5. Anonymous Coward
    Anonymous Coward

    Trust

    Why would any employee ever trust an employer after this?

    1. RealBigAl

      Re: Trust

      Anyone who trusts an employer in Britain anytime this century years hasn't been paying attention.

  6. quite_remarkable

    Further proof if it were needed

    That IBM should never ever be trusted on anything. A morally bankrupt, deceitful, manipulative organisation incapable of the truth.

    1. mako23

      Re: Further proof if it were needed

      A fair and accurate portrayal

    2. Anonymous Coward
      Anonymous Coward

      Re: Further proof if it were needed

      Ah-hah! IBM = "I'm Bankrupt, Morally"

    3. a_yank_lurker Silver badge

      Re: Further proof if it were needed

      And those are their good points.

  7. mako23

    Bad Company

    I look forward to the day when this company collapses. Every time I see the share price drop I Rejoice a little.

  8. Chris G Silver badge

    Contempt of Court

    Another judge upholding a 'Too big to fail' company's wrong doing, to benefit the company executives and shareholders in preference to the workers whose money they have misused/appropriated and without whom would have no product to offer.

    One can only hold such judges and their courts in contempt.

    1. Anonymous Coward
      Anonymous Coward

      Re: Contempt of Court

      There are two problems with this. The first is it's not the judge's job to decide if a defendant's actions were morally wrong. Their job is to decide whether those actions constituted breaking the law. People who murder people still get found guilty even if the victim deserved it, which is why the lesser charge of manslaughter is a separate offence. The judge here has ruled that IBM did no wrong in the eyes of the law. It's the law makers that need to be blamed, not those who enforce it.

      The second problem is judges are very much part of the same system that makes laws. Despite what we like to think, this country and those who run it are a very corrupt organisation. I doubt IBM is deemed too big to fail, but I would not be surprised in the slightest if they had those on their side who were able to influence this decision. After all, that's what getting yourself a "good lawyer" is all about.

      I don't see the value in suggesting anything underhand specifically occurred here. I've nothing to base such an allegation on and I doubt it would change anyone's opinions of what's clearly a rotten and rotting company in the opinion of most folk in the IT industry.

      But the judiciary is the best we have and it's better than the alternative, so we should protect it and appreciate it.

      1. Adam 52 Silver badge

        Re: Contempt of Court

        In this case the court wasn't really asked if IBM was breaking the law, it was asked which is more important - the duty to shareholders or the contract with employees.

        They decided that since pay rises were expected but not contractually required that IBM could legitimately say "take the pension cut or no more pay rises for you".

        That's my summary, after skim reading the huge judgement.

        http://www.bailii.org/ew/cases/EWCA/Civ/2017/1212.html

        You also get the impression that the appeal court didn't really understand the original judge's decision. Which is sad really. I have this nagging doubt that the appeal court may have not understood the case as well as the first and missed something important.

  9. Len Goddard

    Consultation?

    I worked for IBM when this happened. From memory it went something like this:

    Here is what we are going to do. We will consult for one month then do it.

    Good faith? Only a lawyer could think that.

    1. davidak

      Re: Consultation?

      Nope, not only a lawyer, that is how management of any organisation thinks. Consultations are 100% fraudulent.

      1. Anonymous Coward
        Anonymous Coward

        Re: Consultation?

        Usually with the exception of medicals.

  10. adam payne Silver badge

    Project Waltz

    A very apt name for a project to walk all over your employees.

  11. fishman

    As I see it

    It looks like IBM treats its employees like crap.

    And it treats its customers like crap.

    Yet top management is making huge salaries and bonuses.

    Sounds like "maximizing shareholder value" would be best achieved by firing all of those at the top.

  12. andy 103

    if it sounds too good to be true, it probably is

    IBM has always been run to pay the people at the top, and occasionally, shareholders. In that order. The employees are merely there to serve that goal.

    If you're an employee of that dire company then my advice is to get out. The only way they'll learn is if nobody is there to help the top people achieve their "goal" of becoming rich whilst shafting everyone else.

    If you find ANY employer, in 2017 Britain, that offers a pension scheme that seems too good to be true, it definitely is. Bear in mind that many companies don't even offer any kind of pension scheme (except for the one they've been forced to offer due to recent changes) or any real contribution. If you're making any significant AVC's on any pension, particularly early on, who do you think is using that money? Hint: not you, and you won't be for some time as you're not of retirement age. You just hope it'll come to fruition later on. Do your homework, spread the risk, and don't put all your eggs in one basket.

    It's an absolute disgrace that staff can be shafted in this way. But keep in mind the old phrase - if it sounds too good to be true, it probably is.

  13. Anonymous Coward
    Anonymous Coward

    I don't want to sound like I am victim-blaming but this will keep happening as long as people are willing to work for IBM. Only when they have to pay 2x the market rate to hire anyone will the message sink in.

    1. Anonymous Coward
      Anonymous Coward

      re Victim-Blaming

      Sorry, that doesn't wash with this population. Those affected by this were either hired prior to 1990-something (when new employees were forced to join a DC not DB pension scheme) or were transferred into IBM by either a services TUPE or by having their previous employer bought by IBM.

      For the first group, back in their day, I understand that IBM was a reasonably generous employer - although the pension scheme was never top-notch - and at the time IBM was still a significant market leader, particularly in research. IBM was then a good place to work - or so I was told. Of course, all this started to change following the changes to the company following its near collapse at the end of the 1990s decade!

      The second catagory hardly had a choice about joining IBM. I know - I was one of them in the early 2000s. Your only choice was take it or leave (that is, be deemed to have resigned). In practice, many in my peer group talked loudly about leaving before the transfer but in reality I don't think that more than one or two actually did.

      So, this wasn't in any way affected by people being willing to join either the IBM of 2009 or 2017.

  14. anothercynic Silver badge

    See ya IBM...

    I guess this means "I'll never work for IBM, ever again". Cheers.

  15. Alistair Silver badge
    Coat

    We can all torch IBM

    However, this function is happening in many places, and has happened already in many places. The concept in the late 70's and early 80's of having put a (portion) of your earnings into a big pool with all your co-workers, left invested over the lifecycle of your working career would provide you with an income to sustain you through your retirement years.

    Pension plans, since 86 have been the *very first* objects that corporations, governments and unions have raided to correct "accounting errors". Every Single Time. As a result some of us cranky old bastards have a reason for wanting the financial wizardsassholes of Wall(balimeout)Street hung, drawn, quartered, shot, pissed on, burned at the stake and launched into orbit.

    But I don't hold it against anyone....

    1. chairman_of_the_bored

      Re: We can all torch IBM

      "hung, drawn, quartered, shot, pissed on, burned at the stake and launched into orbit"

      Agreed, but not necessarily in that order.

      1. PNGuinn Silver badge
        Megaphone

        Re: We can all torch IBM

        ""hung, drawn, quartered, shot, pissed on, burned at the stake and launched into orbit"

        Agreed, but not necessarily in that order."

        MORE space junk?

  16. Anonymous Coward
    Anonymous Coward

    Retribution

    IBM's gotta be lucky this case is in the UK; I'd think if IBM were severely cutting back pensions to Americans, especially ones near Armonk, to the point people were losing their houses and ability to survive, it wouldn't be safe to be in corporate HQ. When some retiree has nothing else to loose, they may take along the board of directors with them.

    1. Anonymous Coward
      Anonymous Coward

      Re: Retribution

      Eh? IBM killed the pension plan in the US years before this UK action.

  17. Anonymous Coward
    Anonymous Coward

    Suck it up, buttercups. The world moved on a couple of decades ago - DB pension schemes are an antiquated legacy that is simply not affordable any more. Join the real world and deal with it.

    1. Anonymous Coward
    2. Anonymous Coward
      Anonymous Coward

      It's not funny.

      I hope you're being deliberately ignorant.

      Ask yourself where the money goes instead, usually into hedge funds and pension funds. Corporates are raiding your future and you seem to be happy about it. How much of them do you own? With a pension you at least had a share of the pie. When you've stopped working who will pay for you,? These sharks are leaving it to the state to pick up the pieces and we all know what happens to government promises.

      My recommendation to all is to put a fixed percentage into an ISA every year. It's yours then, just make sure you look after it. I did since Tessa's were available and now my ISA generates more than my pension is predicted to, and I have a good pension for the moment. I'm also ex-IBM but not affected by this.

      1. Anonymous Coward
        Anonymous Coward

        Re: It's not funny.

        While I have a degree of sympathy for those who were affected by this, there's a limit. Pension "pots" aren't literally a pot of money; they're a supposedly ring-fenced amount that is reserved to pay out pensions. However, that's not how it really works. There's no point whatsoever in just putting money under the mattress, so instead that money is used. All a final salary pension is, is a promise. Yes, that promise was broken, and that's the issue here, but I find it very difficult, as a former IBM employee on an M plan pension, to feel sorry for those with their final salary pensions, when I'm going to get close to fuck all when I get as far as retiring, and meanwhile all the work I did while I did work there made money to pay for those who once worked there and their big fat pensions.

        Yes, those who were promised those big fat pensions and didn't get them have a right to feel incredibly pissed off, but what you did get is a shit load better than what anyone now is getting.

        Just another example of the baby boomer generation's desire to salt the earth behind them after having stripped it bare.

        IBM are still cunts though.

        1. Charles 9 Silver badge

          Re: It's not funny.

          Thing is, breaking a promise where money is involved usually has legal repurcussions, as that typically can get sued or even charged as Breach of Contract.

    3. Anonymous Coward
      Anonymous Coward

      You must be a banker.

      You are right this is a legacy as this was a promise made many years ago. How would you feel if you bought something that promised to pay in the future and didn't?. Your pension is a part of your remuneration deferred. Decent people keep their word, IBM used to be famous for it.

  18. Mookster
    Facepalm

    At Sony, in the late 90s, they decided that new employees would be on a defined contributions pension. Existing employees were given the option of staying with defined benefits or getting a payout to switch.

    2009 seems a bit late for this sort of thing..

  19. John Smith 19 Gold badge
    Unhappy

    Historically you might like to thank Gordon Brown.

    IIRC correctly he thought it a corking wheeze to change the tax rules on employer contributions to final value pensions and bag the govt some serious extra cash.

    AFAIK no later govt has seen fit to reverse his changes.

    Naturally the pension offered to senior civil servants and MP's remains fully Gold plated.

    Still who needs a company pension scheme these days? Pension schemes are about rewarding long term loyalty and staff spending their whole working lives in the same company. Since CEO's now seem to be playing a game of perpetual musical chairs I imagine they find it hard to see why anyone else should have their loyalty rewarded for decades of work.

    1. Anonymous Coward
      Anonymous Coward

      Re: Historically you might like to thank Gordon Brown.

      That man has a lot to answer for.

      Ironic that John Smith was a previous leader of the labour party.

      1. John Smith 19 Gold badge
        Unhappy

        "Ironic that John Smith was a previous leader of the labour party."

        Quite true, although I am not named after him.

        Possibly the best Labour Prime Minister Britain never had.

        Who died after going along for tea at the Russian embassy apparently.

        1. Anonymous Coward
          Anonymous Coward

          Re: "Ironic that John Smith was a previous leader of the labour party."

          You are probably right. I think he would have made a better job of it than Blair and definitely better than Brown. We'll never know.

          Is tea with the Russians fake news?

    2. Commswonk Silver badge

      Re: Historically you might like to thank Gordon Brown.

      @ John Smith 19

      I think you are slightly mistaken, but only slightly. GB changed the rules so that pension provider / scheme investment income was taxed, and was thus not available for reinvestment and so on. This made a material difference to the amount of money that pension providers had available to pay out to those in retirement, and has (as far as I can see) been a major factor in the deepening black holes that have appeared in numerous DB schemes, leading to their closure in favour of DC schemes.

      I would certainly agree that no later govt has seen fit to reverse his changes; had the Conservative Government restored the status quo ante between 2010 and now then we can be sure that the change would have been trumpeted from the roof tops.

      Increasing life expectancy has certainly had an impact on the viability of several / many DB schemes, but I would argue that the biggest factor in their decline was Gordon Brown's tax raid on them.

      1. RegGuy1

        Re: Historically you might like to thank Gordon Brown.

        Well put yourself in GB's shoes. If it helps think of the last UK election where the Tories tried to do the sensible thing of getting the dead to pay for the social care of the soon-to-be-dead. All those who would now lose their inheritance (mainly over-priced houses) had a fit.

        Government is about working out who will pay. Alas democracy makes this very difficult, as every member of the electorate wants it not to be them. So we have stupid schemes such as student loans, where the students borrow from their future to pay for their studies. (And most won't actually pay them back -- how does that work?)

        I agree that the IBM decision is not fair, but then again, the miraculous world of the 80s and 90s, when Thatcher freed us all to make loads of money and investment growth rates were extremely high (think endowment policies), couldn't last. But it did last 20 years or so, long enough for people to think it would go on forever.

      2. Anonymous Coward
        Anonymous Coward

        Re: Historically you might like to thank Gordon Brown.

        As usual you are right.

  20. Anonymous Coward
    Anonymous Coward

    Pensions, go independent if you can.

    Having escaped Idiot Bleeding Management I ended up in a 'technical' role in a leading Russell group research University (Southampton). I joined the 'local' pension scheme as my grade was too low for the USS scheme. As I progressed I ended up on a USS grade, so I was told I must transfer to it, legal advice was sought as they only offered 1 year for every 8 years contribution to the local scheme and I dug my heels in and stayed in the local scheme, which was so well in profit the employer took an multi YEAR holiday from contributing. Fast forward 10 years and USS is in trouble, so they start changing the scheme, now forwards to today, with the financial down turn those years of holiday now see the local scheme underfunded, now the bastards are saying the local scheme is unfair to USS members, so in the name of equality WE are to be shafted as well, so they don't have to pay up for the holiday... Sir Christopher on his fat salary no doubt has private pension provisions, the Bronze TEF has little effect on such things, whilst those that face the ongoing poverty of 1% pay rises, as against 10%+ of management with the cost of living rising over 2.7%, can barely afford to live, let alone pay into a private pension. IF you can, go private, at least you'll have some comeback with the financial ombudsman.

  21. Snowy
    Flame

    Only 25% got booted off

    [quote]The case is related to Project Waltz, implemented in 2009 to help Big Blue achieve its 2010 targets for earnings per share and slash costs, resulting in 25 per cent of UK staff booted off the final salary pension scheme.[/quote]

    Seem rather unfair to that 25% that got booted out, it should have been all or none to be 100% fair.

    1. Anonymous Coward
      Anonymous Coward

      Re: Only 25% got booted off

      @snowy

      >> Seem rather unfair to that 25% that got booted out, it should have been all or none to be 100% fair.

      This part of Project Waltz was about the termination of accrual (that is, the ability to make contributions) by existing members of all IBM DB pension schemes - save for a limited number of employees who, by virtue of their transfer agreements and contracts from previous employers, had a contractual right to continue in a DB scheme (mostly, but not all cases ex-civil service or local government).

      So, the 25% (of all IBM UK employees) was nearly 100% of members of the "final salary" (DB) schemes - all of whom were by then medium-to-long term members of the schemes.

      NB: Like many others, the DB schemes had been closed to new employees (again, save for those joining through TUPE where the contract included membership of an IBM DB pension scheme) for many years, dating back to sometime in the late 1990s.

      1. Anonymous Coward
        Anonymous Coward

        Re: Only 25% got booted off

        Which is why I jumped as soon as I could after TUPEing to IBM. No trust.

  22. This post has been deleted by its author

  23. Anonymous Coward
    Anonymous Coward

    Pot in a hat.

    I am unsure why anyone would take a pension as a benefit when considering employment.

    Am even more unsure of why it is legal for said employer to eventually steal that deduction from your remuneration whilst having the cheek to rebrand it as a raid on your contribution.

    The underside of my mattress is looking like where the sensible money goes.

    1. Charles 9 Silver badge

      Re: Pot in a hat.

      Then how do you deal with inflation which constantly devalues mattress money?

  24. Anonymous Coward
    Anonymous Coward

    How's that working out for you IBM?

    You know that whole "we'll do everything we can to increase our EPS and dividends to some magical number!" - except the one thing you aren't doing it improving your business value. Slash and burn, cloud atrophy...to the point Microsoft and AWS don't even see you as being in the race. What's left now? Not much,

  25. Chris Coles

    Over many years, anyone following the rulings delivered by the appeal court will have come to the conclusion that the next step for the employees is to take this to the House of Lords; Now called The Supreme Court. It is certainly true that many appeal court rulings have been reversed.

    Long ago I formed the personal opinion that the appeal court, for their own reasons, leaves matters open to be taken on to the Lords for a final ruling.

    1. Anonymous Coward
      Anonymous Coward

      Pensions

      Would be nice if we could afford to do that. However, IBM has deeper pockets and currently it would appear that the white flag has been raised.

  26. mako23

    The Empire Strikes Back

    The only thing missing from Ginni Rometty is a black mask and deep metallic breathing. She sure is a record breaker 21 consecutive quarters of revenue decline.

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