UK - Merrill Lynch Investment Managers' hopes that other pension schemes will not take legal action following its settlement with Unilever have been dashed.
The Occupational Pensions Defence Union has seen an upsurge of interest in the insurance product it launched last year which allows pension schemes to take cover against court costs in the event of unsuccessful legal action.
The inquiries have come since the £70m settlement between Unilever and MLIM.
OPDU director Jonathan Bull said: “We have had contact from people which I’m not surprised at in view of developments with Unilever. Quite a few people have been talking about considering their position.
“People are exploring with us at an enquiry stage the possibilities of going forward. That is a reflection in itself that people are considering whether they want to pursue anything or sit down with other parties and negotiate.”
Bull was unable to name the parties who have made enquiries.
But J Sainsbury, AstraZeneca, Surrey County Council and Carclo have all previously indicated that they are looking at their options and considering potential litigation against MLIM.
Sacker & Partners partner Jane Kola believes the insurance product may help, but warned trustees to be careful when considering potential action because it can take up lots of time and lead to huge costs.
She added: “While I don’t think it will encourage millions more claims, the insurance might help out in a few cases where the trustees in the cost/benefit analysis have got a good claim, but the costs involved and length of time it would take is too great for them.”
The insurance product, offered in conjunction with OPDU’s sister company Thomas Miller Litigation Management (Tomlim), covers between £100,000 and £500,000 (although higher amounts may be considered) in the event that trustees are ordered to pay court costs. Potential litigation is analysed on a case-by-case basis by in-house barristers at Tomlim.
Costs in the Unilever v MLIM case are believed to have been around £10m.
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