IBM’s appeal over closing its defined benefit plans was upheld by the Court of Appeal in England and Wales, dismissing the High Court’s 2015 ruling, in which Justice Nicholas Warren said the company had breached its contractual duty with employees due to the way they had been consulted about pension changes.
The case revolves around Project Waltz—implemented in 2009—which eliminated IBM’s defined benefit plan, leaving workers with only a defined contribution plan.
According to The Register, the change shifted the financial risk from the company to pensioners so IBM could achieve its 2010 targets, leaving a quarter of its UK staff off the final salary pension plan.
The Court of Appeal concluded that Justice Warren was wrong to assume that there was a “reasonable expectation” for continued defined benefit accrual. It also said that Justice Warren was wrong in deciding that IBM was required to announce a change to its employees before retirement policies changed.
In addition, the Court of Appeal decided the High Court was wrong in deciding that the way the initial non-pensionability agreements in 2009 and 2011 were procured was in breach of the company’s contractual trust obligation and confidence to employees.
“For the reasons that we have set out above, we will dismiss the cross-appeal and allow the appeals, and we hold that it would not be right to injunct Holdings and UKL from implementing Project Waltz without carrying out a further consultation process, on account of the breaches of duty in respect of the consultation process before Project Waltz,” the Court of Appeal said, according to The Register.
As of June 30, 2017, IBM has more than $120 billion total assets.
Tags: IBM, Pension, Project Waltz, UK Court of Appeal