UK - Financial service workers are urging the government to close a loophole which allows their firm's multinational parent to "run away from its pension liabilities".
Members of the Nikko Europe plc Pension Fund claim they will lose up to 40% of their pension savings because the firm’s parent, Nikko Cordial Securities, put the scheme into “member voluntary liquidation” in December 2001.
They say this means the firm, which continues to trade successfully as a worldwide financial institution, is not bound by last June’s action plan to ensure solvent companies meet their pension liabilities in full. Scheme members want the government to make the legislation retrospective to cover all solvent companies still winding up a scheme.
Nikko Europe, which employed around 450 people at its peak, is yet to reach settlement with its 360 deferred members but funds are currently sufficient to cover just 59% of promised benefits.
A scheme member, who declined to be named, accused Nikko of running away from its liabilities.
He said: “After strong promises of the benefits of joining the final salary pension fund, the company now has the shame-faced arrogance to walk away leaving members in the lurch. When the European operation was wound up Nikko agreed to pay its creditors in full, but not make good the pension fund.”
Denton Wilde Sapte partner Elmer Doonan (pictured) said legislation to close the loophole was “long overdue” and should be implemented as part of the current drive to stop employers walking away from pension liabilities.
He said: “The government has been aware of the problem for a number of years, and there is no reason legislation could not be made retrospective for schemes still winding up.
“Nikko is a financially fit employer, which could easily afford to deal with the problem, instead of deciding to walk away.”
Former government adviser Ros Altmann agreed.
She said: “Employers know that if the scheme becomes too expensive, they can wind it up and walk away from their liabilities. It is morally reprehensible that a company which can well afford to meet its pension promises, is happy to just walk away because the flawed legislation of the UK allows people’s pensions to be decimated.”
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