UK – Accountancy firm KPMG has lost out in a dispute with the pensioners of one of its own pension schemes.
The House of Lords has refused to let the firm appeal against a ruling that its so-called Pre-2000 Pension Fund – in operation since 1949 – was a defined benefit arrangement.
The decision followed High Court and Court of Appeal proceedings to establish the nature of the scheme, said law firm Pinsent Masons, which acted for the pensioners.
The move means that KPMG has a statutory obligation to fund the deficit in the scheme, Pinsents said. The ruling that the rules of the scheme do not allow pensions in payment to be reduced was also upheld.
“The House of Lords' decision not to allow KPMG to appeal is a huge relief to pensioners,” said Isabel Nurse-Marsh, head of pensions litigation at Pinsents.
“During several years of uncertainty they have been very worried that their pensions might be reduced. Since they are retired, our clients have no ready means to make up any cut in their pensions. KPMG will now be obliged to fund the scheme's deficit, just like any other defined benefit scheme."
KPMG said it welcomed the decision. “We are pleased that there is now clarity as to the nature of the scheme, and a long period of uncertainty has ended,” said HR head Eddie Donaldson.
“The issues involved some complex and technical areas of pension law, and KPMG had received strong legal advice to support its view that the scheme was money purchase in nature.”
“But we accept today’s ruling, and KPMG will now agree with the Trustee an appropriate plan to ensure the scheme is adequately funded over time.
“The firm has already set aside £13m in 2004 and provisionally earmarked a further £15m late last year to be available to deal with this outcome.”