The trustees say that the new plan for its over 15,000 members will give better benefits than offered by the Pension Protection Fund.
On 29 April 2013, Eastman Kodak Company announced that it had reached a settlement with its largest creditor, The Kodak Pension Plan (KPP), in an agreement that spins off the personalized imaging and document imaging businesses to KPP.
Whilst this transaction provides the best deal for the KPP, the trustees have concluded that the existing deficit is so large that the scheme cannot continue in its current form and therefore will be required to reduce benefits from their current level. Therefore the 15,000+ members will be offered the chance to transfer to a new scheme. Any member that does not make the decision to transfer will enter the PPF.
The new scheme:
All members will receive 100% of the pension they are receiving or expecting to receive under the old plan. If members who are under their normal pension age in the KPP go into the PPF they would only receive 90% of expected pension income after any compensation cap (see page 7 of the attached booklet to see how the cap works) – which could reduce their potential income substantially.
Those members who are over their normal pension age in the KPP will also receive a one off increase to their pension income equal to 3% of any pension earned before 6 April 1997
All members of the new plan will receive better benefits than from the Pension Protection Fund (PPF), which is the only alternative
– No members would have their benefits capped as would be the case in the PPF
– No members will have their benefits cut to 90% as would have been the case under the PPF
Going forward, members pensions will rise in line with statutory increases – which are higher than those that would be offered by the PPF but less than the current KPP
– Lump sum death benefit is protected (where applicable)
– All members will be asked to vote to choose to accept the terms of the new plan.
– There is no opportunity for members to remain in the existing plan which had become unsustainable. Members who abstain or vote no to the proposal will stay with the old plan for a short time before being transfered to the PPF which will be less generous than the new plan before the end of the year.
– As an added safeguard, the new plan will be eligible to enter into the PPF at a future date, should that be necessary
It is anticipated that the new benfits structure will come into force in the Autumn if sufficient members vote in favour
– The KPP is only able to offer its members this new plan because of the recent settlement it reached with Eastman Kodak.The settlement, when approved by the US courts, will facilitate the transfer of ownership of the Personalized Imaging and Document Imaging businesses to the KPP1
Keeping members informed
– Member presentations to explain the new plan will be held at a series of venues around the country during June2
– Members have been sent a “general terms mailing” which outlines the new plan and the benefits available. Each member will receive another letter which gives them specific details about their own benefits before the end of May
– MembersÂ will be asked to vote over the summer
Commenting on the successful completion of negotiations and the launch of the potential new plan on behalf of the KPP Trustees Steven Ross, independent Chairman, said:
“The Trustees of the Pension Plan have managed to negotiate a fair deal of behalf of members. The Trustees firmly believe that the deal should enable members to avoid substantial loss of their pension benefits. I hope that members agree and vote whole heartedly for the new plan when they have the opportunity.”
A website for members, giving them information about the new plan, is available at:Â www.yournewkpp.co.uk