UK – The new trustees at the six million-pound (nine million-euro) Blyth & Blyth pension scheme say they are taking legal action against the scheme actuary, his employer Mellon and three former trustees over the deficit in the scheme.
“The trustees of the pension scheme of the former Scottish consultant engineering company, Blyth & Blyth Ltd., are taking legal action against the scheme actuary and his employers, formerly Buck Consultants Ltd. but now Mellon Human Resource & Investor Solutions (Actuaries & Consultants) Ltd, as well as three former trustees, all of whom were directors of Blyth & Blyth Ltd,” the new trustees said in a statement.
The trustees, P S Independent Trustee Services Ltd., or PSITL, are part of actuarial consulting firm Punter Southall. It said the deficit at the Edinburgh-based engineering consultancy “was so large that there was no money left to pay any benefits to members who had not retired”.
PSITL warn there may not be enough funds available for them to secure the benefits of those members who had retired prior to the scheme’s wind-up in November 2002.
Eddie O’Hara, chief executive at the Mellon unit, said the action didn’t solely relate to his firm and that the firm was “digesting it”.
The legal action is believed to be the first instance in the UK of trustees and actuaries being held liable for a significant part of a deficit. The deficit emerged when the pension scheme was wound up.
A spokeswoman for PSITL declined to say how much was being sought.
Caroline Instance, chief executive of the Actuarial Profession, said it would be "inappropriate" to comment on the matter.
PSITL said: “The action comes after the large pension deficit was found in Blyth & Blyth’s final salary pension scheme in late 2002, which was a significant factor in the company going into receivership in January 2003.
Scheme administrator Charles Savage was not able to say how big the deficit is. He said the defined benefit scheme has 234 workers and 57 pensioners.
The scheme was wound up in November 2002. The Blyth & Blyth business was bought out by former directors last year. They appointed PSITL in January 2003.
Andy Scott of PSITL said: “It is a great shame that we have had to resort to taking legal action. However, following a report commissioned from an independent actuary by the present trustees, we have been advised by our lawyers that a strong case can be made against the scheme actuary and certain former Trustees who were also directors of the company.
“Based upon this advice, proceedings are being instigated by the present Trustees in order to reverse three early retirement decisions and to recover other losses to the pension fund.”
Scott added: “There are particular circumstances in this scheme that have led to the large deficit and these may well not apply to other schemes.”
According to its website the Edinburgh-based firm – which dates back to 1848 - had a turnover of 3.9 million pounds in its first year of trading.