UK - Proceedings have begun in the court case between Unilever and Merrill Lynch over claims that Mercury Asset Management, the fund manager taken over by Merrill Lynch, acted negligently in managing the Anglo-Dutch giant's pension fund.
Unilever is seeking £130m in compensation because it believes former Mercury fund manager Alistair Lennard took excessive risks that led to an underperformance greater than the contractually agreed 3% on the FTSE All Share benchmark.
The conglomerate also argues that Mercury did not have sufficient controls in place to monitor the performance of its fund managers at the time.
In his opening statement, Unilever’s barrister Jonathan Sumption QC said: “No other portfolio at Mercury underperformed like this one. Mr Lennard constructed a portfolio that was strongly sensitive to his own judgements, and the scale of its performance points at something wrong with the construction of it.”
But, in a statement, Merrill Lynch said: “We regret this isolated case of underperformance but it occurred because we were on the wrong side of some highly unusual and persistent market factors in 1997.”
The case is expected to last between six to eight weeks.
Standard Life has increased exposure to risk assets in three out of five funds in its Active Plus and Passive Plus workplace pension ranges.
Some 48% of employers are unaware of the services or help they offer to members of their defined contribution (DC) schemes, according to Aon.
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