UK - Companies have been warned to resolve uncertainties over pension benefits or face a KPMG-style ruling which left the accounting giant responsible for a massive shortfall.
The High Court ruled that the £348m KPMG Staff Pension Scheme’s pre-2000 fund is a defined benefit plan and the firm is responsible for its £65m deficit.
KPMG, which believed the scheme was a defined contribution plan, also wanted to invoke a clause in the trust deeds that would have allowed it to cut pensions in payment.
The High Court rejected KPMG’s argument – the firm has until September 30 to appeal.
And lawyers believe other companies face similar problems.
Dickinson Dees partner Martin Jenkins (pictured) said: “The chickens have come home to roost for KPMG. There are a number of schemes out there with issues over entitlement to benefits. A number of them will now be looking to clarify things, and if they don’t, the members will push them to do so.”
Norton Rose partner Lesley Browning agreed.
She said: “Obviously KPMG works differently to the standard DC scheme, but I have seen others like this before. There will undoubtedly be some schemes that will be affected by the judgement.”
She added that following the judgement companies may have mistakenly wound up what they thought was a DC scheme. And if that was the case, the scheme may have been wound up incorrectly as the sponsor would not have plugged its deficit.
“I wouldn’t be surprised if – and this applies to historic schemes – a lot have been wound up incorrectly.
“If you thought a scheme was a DC during the wind-up, you might not have plugged the gap in benefits. So potentially, there are schemes out there that have been incorrectly wound up on the basis of this judgement.”
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