UK: adviser in €17.1m payout to MFI
UK – The MFI Furniture Group, whose two defined benefit schemes have a £295m (€422.1m) deficit, has announced it has received £12m from one of its advisers who it says is partly responsible for £40m of extra liabilities.
“The board of the MFI Furniture Group Plc continues to take advice and consider with the trustees the actions required to obtain recovery, if material, from any other third parties in relation to the remaining deficit in the pension plans,” the company announced today.
The name of the adviser was not available as company secretary Gerard Hughes was not contactable for comment.
Last year MFI said it was taking legal advice over its advisers’ alleged mistakes which led to the accumulation of £40m additional liabilities.
The company said it all started in 1994, when the pension age for men and women was equalised at 65 years.
“Although announcements to this effect were made at the time to plan members, the relevant trust documentation was not properly amended,” the company said last May.
“This is liable to result in the part of the benefits earned by employee members over a period from 1994 to 2004 having to be calculated using normal retirement date of age 60 rather than 65,” it continued.
In its financial results for last year MFI said it would pay an additional interim funding rate of £20m a year to the troubled pension funds.
Actuarial valuations of the two schemes are due on April 6 2005. “We intend to adopt FRS17 in 2005. Pension costs charged to the profit and loss account in 2005 under FRS17 are estimated at £34m, compared to the SSAP 24 charge in 2004 of £16m,” MFI said in its financial results.
The company also said the FRS17 valuation as of 31 December 2004 showed a deficit of £295m, £206m net of deferred tax.