IBM will have to rectify the trust deeds and rules for its UK defined benefit (DB) plan to allow active members to retire from age 60 without the organisation’s consent or reduction in their pension, following a High Court judgement.
The case was brought before the courts by the pension scheme’s trustee, IBM UK Pensions Trust, which argued that, when the plan was established in 1983, it was with the intention that active members would be able to retire between ages 60 and 63 without IBM’s consent or a reduction in their pension, but that a mistake in the original deeds established that consent was required.
The High Court ruled that evidence provided the intention was there and that the deeds must now be rectified. IBM has stated that it will cost the organisation £100 million to comply with the ruling.
Peter Murphy, partner at pensions law firm Sackers, said: “What is unusual here is that the claim was brought by the trustees in order to increase members’ benefits beyond that as provided in the rules.
“More often, these actions are prompted by the employer’s desire to bring the wording of the rules into line with the lower benefits being paid in practice.”
Bob Bridges, chairman of IBM Pensions Trust, said in a statement that the trustees are now seeking clarification from IBM as to whether the right to retirement without consent and with no reduction in pension will apply to current employees who are former members of the plan, which was closed to new entrants in 1997.
The changes do not apply to deferred members of the scheme, but the trustees are taking legal advice as to whether to pursue this matter further, said Bridges. He added that the Pensions Trust team was also considering whether the ruling will have an effect on the level of pension payable to individuals.