The IBM case: five things you need to know
By Louisa Knox
In the recent case of IBM UK Holdings Ltd v Dalgleish, IBM was found to have breached its duty of good faith to its employees when it closed its defined-benefit (DB) pension schemes. The decision emphasises the need for employers to act carefully when making changes to DB scheme benefits. This article sets out five key things you need to know about the case and its implications for employers and trustees.
IBM proposed to amend two of its DB pension schemes between 2009 and 2011 to close them to the future accrual of benefits, remove the existing enhanced early retirement options and implement a pensionable pay cap. The changes would affect more than 5,000 scheme members. This was IBM’s third benefit change exercise in recent times — separate projects had taken place in 2004 and 2006.
The trustees of the two schemes were worried about the legality of the changes and asked the English High Court to provide guidance on a number of issues relating to IBM’s proposal, including whether the implementation of the changes would breach IBM’s duty of good faith owed to the members…
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