The arrangements (“Arrangements”) for the nomination and selection of Member Nominated Directors (“MNDs”) have been agreed by IBM United Kingdom Pension Trust Limited, the Trustee of both the IBM Pension Plan and the IBM IT Solutions Pension Scheme (the “IBM Plans”). These arrangements were approved at the Trustee meeting on 21 August 2019.
1 General Arrangements
1.1 The IBM Plans are treated as one single scheme for the purposes of the MND Arrangements.
1.2 The Trustee Board has a maximum of nine directors, of which three are nominated and selected by a process which involves all the active members and retiree members of the IBM Plans. Section 3 below contains more information about the nomination and selection process.
1.3 Subject to paragraph 1.14 below, of the three MNDs two are active members and one is a retiree member.
1.4 For the purposes of these Arrangements:
1.4.1 “Active members” are those who are currently building up a pension in an IBM Plan. However:
(a) active members who are also in receipt of a pension from an IBM Plan are treated as retiree members for the purposes of these Arrangements; and
(b) active members who have suspended their M Plan Membership are permitted to participate in the nomination and selection process for MNDs, being categorised as Group 5 Hybrid deferred members in section 2.2 below.
1.4.2 “retiree members” are those who are in receipt of a pension from an IBM Plan either in respect of their pensionable service under the IBM Plans or by reason of transfer credits, with their pension derived from either a defined benefit or defined contribution promise (or both).
However, neither (a) Dependants (i.e. persons in receipt of dependants' pensions (such as spouses, civil partners, children or other dependants) nor (b) M Plan members who have retired and are receiving pension payments from an external annuity provider, are included as retiree members for the purposes of these Arrangements.
1.5 The definitions in 1.4 above, are subject to the provisions in section 4 below which describe the arrangements for those who switch between categories of membership in the period between the date of the nomination form and the commencement date of the MND term of office.
1.6 Deferred members, including those members still working for IBM who have opted out of the IBM Plans, are not permitted to put themselves forward for nomination as MNDs, nor will they be allowed to participate in the nomination or selection process for MNDs.
1.7 The nomination and selection process (see section 3) will take place within six months of the expiry of the term of office of the MNDs or such other period as the Trustee considers is reasonable in the particular circumstances, and which is consistent with The Pensions Regulator's Code of Practice.
1.8 An active member or retiree member will not be eligible to be appointed as a MND if that person is:
1.8.1 aged under 18 at the date of appointment; or
1.8.2 an undischarged bankrupt; or
1.8.3 disqualified from being a company director or convicted of an offence involving dishonesty or deception; or
1.8.4 prohibited or suspended from being a pension scheme trustee/trustee director by The Pensions Regulator; or
1.8.5 prevented from doing so by virtue of the provisions of any applicable legislation and/or the Articles of Association of the Trustee.
1.9 The basic term of office for MNDs is three years. This may be different in the case of an MND filling a vacancy. See section 5 (vacancies) below.
1.10 MNDs, as trustee directors, will have responsibility for all members of the IBM Plans including active members, deferred members and retiree members, and not just the constituency that they were originally elected by.
1.11 MNDs will not be excluded from any function(s) exercised by the Trustee directors by reason only of the fact that they are MNDs.
1.12 There will be no upper age-related limit for MNDs.
1.13 MNDs can stand again for nomination and selection as MNDs at the end of their term of office if they remain eligible.
1.14 If a Multi-group active MND (as defined in section 2.3) ceases to be an employee and immediately takes their pension from the IBM Plans, that person is entitled to remain an MND for the remainder of their term of office. This may result in two retiree member MNDs and one active member MND.
1.15 An MND will cease to be an MND:
1.15.1 Automatically on any of the circumstances in 1.8.2 to 1.8.5 applying to the MND;
1.15.2 If the MND resigns from office as a Trustee by giving the Co-Chairs at least one month’s written notice, on the date specified in the notice;
1.15.3 Automatically on the death of the MND;
1.15.4 On the date of the Trustee decision to remove the MND, but only if all the other Trustee directors agree to the removal of the MND;
1.15.5 In the case of an M Plan active MND (as defined in section 2.2) or a Multi-group active MND automatically on the date the MND ceases to be an employee of IBM and becomes a deferred member;
1.15.6 In the case of an M Plan active MND automatically on ceasing to be an employee of IBM on account of becoming a retiree member; and in each case, this will result in a casual vacancy (see section 5.2 below).
2.1 There are two constituencies: one for active members (active member constituency) and one for retiree members (retiree member constituency).
2.2 The active member constituency is comprised of the following four groups:
- M Plan active members
Standard M plan active members
Hybrid M Plan active members*
Enhanced M Plan active members*
- I Plan active members
- Enhanced M Plan members with DB benefits
- Hybrid members with DB benefits
* who have opted out of their hybrid/enhanced DB membership
2.3 There are two MND posts for the active member constituency: one MND is selected from group 1 (the “M Plan active MND”) and the second MND is selected from any of groups 2, 3, or 4 (the“Multi-group active MND").
2.4 All members of the active member constituency can select two MNDs, one person from the M Plan active member group and one person from active member groups 2-4 (inclusive).
2.5 The retiree member constituency is comprised of retiree members . There will be one MND selected by the retiree member constituency.
2.6 The nomination and selection process will apply separately to each constituency.
3 The Nomination and selection process
3.1 Nomination process
3.1.1 Only M Plan active members (group 1) are eligible to be nominated for the post of M Plan active MND.
3.1.2 Only active members described in groups 2, 3, or 4 above are eligible to be nominated for the post of Multi-group active MND.
3.1.3 Only retiree members are eligible to be nominated for the post of MND in the retiree member constituency.
3.1.4 Individuals are not able to nominate themselves.
3.1.5 The nomination must be supported by five other members from the relevant constituency.
3.1.6 Nominees must have a minimum of two years continuous IBM Plan membership (which may include hybrid deferred service and transferred in service – i.e. as a result of a TUPE transfer).
3.1.7 Candidates must be normally resident in the UK.
3.1.8 Candidates must have access to the internet as Trustee meeting papers and some training will only be available electronically.
3.2 Selection process
3.2.1 Where there is only one nomination for the MND post for:
(a) the M Plan active member; or
(b) the Multi-group active member; or
(c) the retiree member
the MND candidate for that MND post will be deemed to have been selected with effect from the commencement of the MND’s term of office.
3.2.2 Where there is more than one nominated candidate for any of the MND posts, an election will be held for that MND post.
3.3 Election process
3.3.1 MNDs will be elected by ballot.
3.3.2 In the active member constituency, each member will have two votes. One vote for the M Plan active MND and the other vote for the Multi-group active MND.
3.3.3 In the retiree member constituency, each member of the constituency will have one vote for the retiree member MND post.
3.3.4 The ballot process will be conducted by an external electoral services provider using the Single Transferable Voting system.
3.3.5 Members in the active member constituency and retiree members who have elected to receive communications electronically shall cast their votes using electronic voting. Members on leave of absence and retiree members who have not elected to receive communications electronically may cast their votes using either electronic or postal voting.
3.3.6 The IBM’s Pensions Trust department will be responsible for managing the overall process and for answering any questions which may arise.
3.4 List of Reserves
3.4.1 Following an election and the appointment of MNDs, the Trustee will create a list of reserves made up of a maximum of five retiree members, five M Plan active members and the five active members from groups 2-4 who were ranked highest in the elections behind the candidates who were actually appointed as MNDs (“List of Reserves”).
3.4.2 The List of Reserves will be published and maintained until the next scheduled nomination and selection process for the IBM Plans when it will cease to apply. A new List of Reserves may be created if, following the nomination process, an election is held.
3.4.3 A member who changes membership status following publication of the List of Reserves such that he or she is no longer in the same group as for the elections upon which the list is based (i.e. no longer still an M Plan active member, Multi-group active member or retiree member as the case may be) will be removed from the list.
4 Change of membership status during a nomination and selection process
4.1 The Trustee has agreed that the following arrangements will apply to any person who changes their membership status between the date of their completed nomination form and the date on which the MND term of office commences:
4.1.1 Active members who leave employment with the IBM group to become deferred members:
(a) will not be permitted to stand in the MND election if they were nominated as either an M Plan active MND or a Multi-group active MND;
(b) will be automatically disqualified from the process if they leave during or after the election process has been run;
(c) will not be permitted to vote in the election process if they leave before the commencement of the election period. However, if they became deferred members after having voted in the election for an M Plan active member and/or a Multi-group active member, their votes will stand.
4.1.2 Active members who leave employment with the IBM group to take their pension from the IBM Plans:
(a) will not be permitted to stand in the MND election for the position of the Multi-group active MND (as appropriate);
(b) will be permitted to stand in the MND election for the position of retiree member MND only if they had declared their intention to retire and been nominated (in anticipation of retiring) as a retiree member, following the nomination process for the retiree member constituency;
(c) will be permitted to vote in the election process as retiree members. However, if they became retiree members after having voted in the election for an M Plan active member and/or a Multi-group active member, their votes will stand.
4.1.3 Active hybrid or enhanced deferred M Plan members who opt-out of hybrid or enhanced deferred membership but remain as an active hybrid or enhanced member of the M Plan
(a) will not be permitted to stand in the MND election for the position of Multi-group active MND;
(b) will be permitted to stand in the MND election for the position of M Plan active MND only if they had declared their intention to opt-out and been nominated (in anticipation of opting-out) as an M Plan active MND, following the nomination process for the active member constituency;
(c) will be permitted to vote in the election process as an active member in any event.
5.1 Vacancies immediately following the nomination and selection process
5.1.1 Where a vacancy is not filled because there are no nominations, the nomination and selection process will be run again for the particular vacancy to bring the number of MNDs up to the full complement of three. The new election will be run at an interval of six months from the end of the original nomination and selection process (or at such earlier interval as the Trustee shall decide).
5.1.2 In the event that the re-run of the nomination and selection process is again unsuccessful, the Trustee shall re-run the nomination and selection process again at such intervals as the Trustee shall decide, but not being at an interval of more than three years from the end of the last nomination and selection process.
5.1.3 The Trustee may decide that the term of office of a person appointed as a result of a re-run nomination process may be varied from the basic three-year term and will take a similar approach to that set out in section 5.2 (casual vacancies) below.
5.1.4 Where the Trustee has discretion to decide upon an interval or term of office as set out above, its decision shall be consistent with the Pensions Regulator's Code of Practice.
5.2 Casual vacancies
5.2.1 A casual vacancy may arise for example, on the resignation or death of an MND or following a change of membership status.
5.2.2 If a casual vacancy arises, the Trustee shall take steps to fill the vacancy as described in this Section 5, with the aim of ensuring that representation on the Trustee Board is maintained as one M Plan MND, one Multi-group active member, and one retiree member.
5.2.3 If a casual vacancy arises the Trustee will choose from one of the following options:
(a) Re-run the nomination and selection process within 6 months of the vacancy arising or within such other period as seems reasonable to the Trustee having regard to the particular circumstances of the IBM Plans; or
(b) Leave the vacancy open for the balance of the three-year term of office i.e. wait until the next scheduled nomination and selection process is run; or
(c) Fill the vacancy from the top of the List of Reserves with the active member or retiree member (as appropriate) from the correct constituency and group or, if the Trustee so determines at the time, in the absence of anyone in the correct constituency and group, from a person at the top of another constituency/group on the List of Reserves.
5.2.4 Where the Trustee chooses option (a) above and the vacancy needs to be filled particularly promptly, the Trustee has the discretion to decide whether the Single Transferable Voting system or the First Past the Post system is used. In the absence of this discretion being exercised, the Single Transferable Voting system shall be used.
5.2.5 The term of office to fill a casual vacancy under 5.2.3 (a) or (c) above may be either the basic term of four years or it may be adjusted by the Trustee so as:
(a) to be less than three years, being the same as the remainder of the term of office of the MND who created the casual vacancy, or
(b) to be more than three years constituting a term of three years, plus the balance of the term of office of the MND who created the casual vacancy. This situation might occur where the casual vacancy arises late in the three-year term of office of the MND who created the casual vacancy; but in either case, the Trustee’s decision must be consistent with the Pensions Regulator's Code of Practice.
6 MND Trustee Knowledge and Understanding
6.1 Education,training sessions and information will be available to potential nominees, actual nominees and successful candidates to enable them to understand the roles and responsibilities of the MND position.
6.2 All MNDs must satisfy the Trustees' knowledge and understanding requirements as set by the Pensions Regulator, using education and the completion of the Pensions Regulator’s Trustee’s toolkit within six months of becoming a Trustee Director.
7 Reviewing the Arrangements
The Arrangements will be reviewed by the Trustee at four-year intervals or earlier if there is a material change to the IBM Plans' circumstances and/or the membership taking into account the requirements of the Pensions Regulator's Code of Practice.