James Bingham comments on the long-awaited IBM judgment
The Court of Appeal has overturned a judgment by the High Court and ruled in favour of IBM in a case concerning changes to the company’s pension schemes.
In 2004 IBM introduced a package of pension changes known as Project Ocean, which resulted in member contribution rates increasing for contributory DB plans and a reduction in the accrual rate of non-contributory DB plans. This was followed by more reforms, completed in 2006, known as Project Soto, which gave members the option to remain in the DB scheme with a lower accrual rate or move to a DC scheme.
Crucially at the time, members were told that IBM had no further plans to make changes to the pension arrangements. However, in 2009, it introduced Project Waltz, which proposed the closure of all DB plans to future accrual, as well as several other plans.
This led to a High Court ruling in 2014, IBM v Dalgleish and others, in which Mr Justice Warren ruled in favour of the members that IBM’s 2009 proposals were in breach of its duty of good faith to members. Sackers associate director James Bingham explained that the original decisions were founded on the idea of Reasonable Expectations. The fact that members had been given expectation during previous pension changes, had greater weight over other factors.
Read the full article in Pensions Age here.
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