UK - A UK subsidiary of Japanese technology giant Fujitsu has been issued with a High Court writ by one of its former employees and pension fund trustees.
Martin Ward, 56, has demanded more than £314,000 (€460,000) from Fujitsu Technology Solutions International Ltd. to cover an assumed loss and legal costs after his move from the company’s defined benefit to defined contribution scheme in January 1999.
The basis of Ward’s writ, as seen by IPE, filed at Reading court on December 30 is that the David Hutton, vice president of the company’s human resources international operations, allegedly said in a telephone conversation that Fujitsu TSI would no longer be committed to allow early retirement as previously stated in the pension fund’s handbook.
Ward said he had wanted to retire between 55 and 60. He claimed that under the company’s previously announced policy, he would have been able to use Fujitsu TSI’s favourable early retirement terms to take a pension of about £26,500 per year from June 2004.
Without these terms, however, and after taking advice, Ward calculated the DB scheme would have only paid about £17,500 per year as a pension while under the DC scheme his pension would have been about £19,500.
Ward claims that because of Hutton’s alleged comments he transferred and was then prevented from going back to the DB pot when it was later announced that favourable early retirement terms would be possible. Although he has not drawn down his annuity while the legal case continues, he claims his pension would now only be about £9,500 per year.
He said: "After 25 years of loyal and committed service it gives me no pleasure to have to pursue my claim against Fujitsu TSI through the High Court.
“Fujitsu has persistently refused to mediate a fair and sensible solution of my dispute arising from what I believed were Fujitsu's representations on early retirement benefits over the years. I trusted Fujitsu's words and feel badly let down.”
Fujitsu TSI, which is now an inactive shell basically just holding the pension fund and its liabilities, declined to comment on the case. Fujitsu TSI transferred most of its employees, business and assets to a sister company Fujitsu Services, which has a £1.1bn pension scheme, on April 1 2004. But in leaving the pension fund behind Fujitsu TSI’s parent promised only to pay the minimum statutory funding requirements, according to its 2004 company accounts.
According to these 2004 results for the 12 months to 31 March, Fujitsu TSI had increased sales to £18m from £15.4m the year before while gross profits, before restructuring expenses, showed the company was just profitable.
As at March 31 2002, Fujitsu TSI's pension fund (under its former name of Amdahl (UK) Ltd Pension Plan) had a deficit after smoothing of £12.4m or a funding ratio of 83% on assets worth £56.6m. This compared to the last valuation that showed only a £2.2m deficit in 1999.
Fujitsu Services declined to comment on the Ward litigation or whether the case would affect its reputation.
The Pensions Regulator declined to comment on whether it would be investigating the case but under its rules 27 April 2004 was the cut off date for ordering related parties to pay a contribution order to any scheme left in deficit while assets were transferred. According to ‘International Pension Funds and their Advisers’, the scheme has £58m of assets and is advised by Hewitt Bacon & Woodrow, which declined to comment.
Member and asset transfers between sister companies has become a controversial issue. The Pensions Ombudsman in December ruled against a petition by disgruntled pensioners of IBM, the giant tech company, who had complained that assets were switched from their DB pot to a new DC scheme leading to a deficit.
Separately, Fujitsu Services’ spokesman said it was currently in discussions with its employees about re-opening the DB scheme to new employees.