NETHERLANDS - Two Dutch pension funds - the €203m pension fund OPG, for medicines wholesale group Mediq, and PMA, the fund for pharmacists - have begun legal proceedings against State Street for losses incurred in the Lehman Brothers collapse.

Without properly informing the scheme, the asset manager had placed up to €47m in a global equity mandate with investment bank Lehman Brothers, and the assets were subsequently caught up in the bank's collapse, according to Johan van der Veen, the scheme's director.

"As far as we know now, the manager had not separated our assets from its own assets," said the OPG scheme said in its annual report, as well as stating that the asset manager had not stuck to the existing agreements.

Without the loss, OPG's cover ratio would have decreased from 132.8% to 121.9%, but the collapse of Lehman Bros last September actually lowered its cover ratio to 93.2%.

The scheme, which has 4,522 participants, reported overall investment returns of -27.7% for 2008, excluding the effect of a full interest rate hedge on its liabilities.

The OPG scheme said it has cancelled all mandates with the asset manager, and is now reconsidering the set-up of its asset management.

It has also liquidated its 5.8% emerging markets mandate as well as a 1.8% property mandate.

Following the deteriorated financial position, the pension fund has decided to raise contributions from 22% to 30% of pensionable salary and will refrain from granting any indexation until 2012.

The Mediq Group will also contribute an extra €5m to the scheme over 2008 as well as an additional €7.5m for the period 2009-2001, providing the financial position of the company allows it to do so.

Elsewhere, PMA, the €883m pension fund for pharmaceutical assistants, said it suffered an equity loss last year because "the manager of its largest equity fund had appointed Lehman Brothers as prime broker".

It continued: "Without the need to do so, and without informing PMA, the asset manager had in fact provided the bank with the technical ownership of the securities," according to PMA.

The fund said in its annual report that it is also preparing legal proceedings against the asset manager for defaulting on its responsibilities.

Bernard Verbunt of law firm Simmons & Simmons confirmed that PMA's legal proceedings are also aimed at State Street.

"The exact loss has not been established yet, but will possibly amount to tens of millions of euros," he said.

PMA reported overall returns of -24.7% in 2008, and equities lost -48.7%. Its cover ratio plummeted from 208% to 112%.

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