UK's Morrisons suffers £100m hit in pension equalisation case
UK supermarket Morrisons has seen its pension liability increase by £100m (€126.7m) after the High Court passed down a ruling over pension equalisation.
The case, initiated by the company’s wholly owned subsidiary Safeway, sought to settle whether retirement ages were equalised in 1991 following an announcement to members, or five years later when the changes were recorded in the rules of the Safeway Pension Scheme.
In the judgment passed down by Justice Warren on 29 February, the court found that Safeway had only equalised retirement ages in 1996.
Justin Briggs, a partner at Burges Salmon, which represented the members of the Safeway scheme, said the decision amounted to a “huge blow” to Morrisons.
“Even for a company of its size,” Briggs said, “a liability of £100m is a significant burden.
“Safeway has sought and been granted permission to appeal, and, therefore, these important issues will be aired before the Court of Appeal in the not-too-distant future.”
The most recent annual report for Morrisons does not disclose the individual sizes of its career-average (CARE) pension funds, either for Morrisons or Safeway, which was acquired in 2004.
Across both CARE funds, it disclosed assets of nearly £4.1bn, and a deficit of £43m, with assets invested largely in liability-matching assets.
The schemes had £1.4bn in equities, £1.1bn in corporate bonds, £1.5bn in unquoted liability-driven investments and £3m in cash at the end of the 2014-15 financial year.
A spokesman for Morrisons told IPE: “This is a complicated area of law, and, to be fair to all of the scheme’s members, we are going to appeal to make sure it is correct to pay some additional benefits to some members.”