IBM HAS LOST a rectification case in the High Court which will cost the computing giant £100m.
In a 140-page judgment, Justice Warren ruled that the trust deed and rules of IBM’s UK defined benefit ‘C plan’ from 1983 were written with the intention to allow employees to retire between 60 and 63, without requiring the consent of the company or a reduction to their pension, Accountancy Age’s sister publication Professional Pensions reports.
The judgment stated: “Once the current trust deed and rules have been rectified pursuant to my decision, there will be a right for a member to retire at any time between age 60 and 63 without employer consent; but provision will be made for deferred pensions to be payable without reduction only at age 63.”
Justice Warren ruled the evidence was “compelling” in the claim for rectification for active members.
But the High Court judge declined to make the same modification for deferred members – although he stated there would be an opportunity for further legal argument.
The case was brought by the trustee for the scheme, the IBM UK Pensions Trust, against the multi-national company’s UK subsidiaries IBM United Kingdom Limited and IBM United Kingdom Holdings Limited.
IBM said in a statement on Friday that the cost of complying with the judgment would be $160m (£100m).
The company said: “The judgment is extensive, and continues to be reviewed in detail by IBM’s legal team. Upon initial inspection, while we agree with certain aspects of the ruling, we respectfully disagree with other key elements. We will consider our rights of appeal.”
In a statement, IBM Pensions Trust chairman Bob Bridges said the trustee was seeking confirmation from IBM that the ruling would affect current employees who were former members of the ‘C Plan’ – which has been closed to new entrants since 1997 and closed to future accrual since April 2011.
Bridges said the trustee was currently taking legal advice as to whether to pursue some further questions over the rights of deferred members.
He said: “The Pensions Trust team is currently considering whether the judgment will have an effect on the level of pension payable to individuals, and will contact members in due course as appropriate.”
The ruling is the first in two cases involving IBM in the High Court. A “good faith” case is scheduled to be heard in February 2013 in reference to pension changes in 2009.
IBM is scheduled to report on its third quarter results tomorrow.
An accelerated entry route into CIMA for CIPFA members is launched
Grant Thornton will conduct the audit of Tern following the resignation of Jeffreys Henry
The International Accounting Standards Board (IASB) have announced that Françoise Flores will join 1 January 2017
The ACCA has announced a partnership with UK research and development tax reclaim specialist RD Tax Solutions