UK/GERMANY - Staff at insurance underwriter Folgate Partnership are considering legal action against the firm's former owner for leaving them with a large pension deficit.
The employees say former German parent Wustenrot & Wurttembergische has walked away from its responsibilities following the sale of the firm to UK insurance group Towergate Underwriting for £20m.
Since its sale in October 2001, Folgate’s pension scheme’s deficit is estimated to have risen from £1m to £4m due to over-exposure to equities. But Wustenrot said it has acknowledged the shortfall and has reportedly undertaken to repair the situation and bring the scheme’s funding level up to MFR.
Linklaters partner Mark Blyth expressed surprise at the dispute as he said it was usual practice for a buyer to do due diligence which would have covered pension scheme liabilities.
Towergate and Folgate refused to comment.
The Pensions and Lifetime Savings Association (PLSA) is in the process of convening an industry-wide group to take forward the work of the Institutional Disclosure Working Group (IDWG).
The Transfers and Re-registration Industry Group (TRIG) has given its support to an initiative which aims to complete occupational pension transfers within three weeks.
Scottish Widows has completed a bulk annuity deal for the Hitachi UK Limited Pension Scheme.