UK - Trustees of the £100m Thorn pension scheme have backed down in a battle with pensioners over how their scheme surplus can be spent.
It is believed the trustees dropped their request for a modification order to the scheme rules because they felt the case was unlikely to be successful.
The trustees applied for the modification order – which would have allowed them to transfer £50m of “disposable” surplus to the scheme’s sponsor, Nomura International – in August 2001 when the scheme’s surplus stood at £130m.
But opposition from the Thorn EMI Pensioners’ Association, prompted OPRA to arrange a full hearing on the matter for February.
The pensioners claimed the modification order, which would have granted the power for the trustees to bring the statutory funding level of the scheme down to 105% of its MFR, was not in the interest of the members.
But Hammond Suddards Edge – one of three law firms acting on behalf of pensioners – claimed the resulting figure might not be enough to cover buyout costs.
Solicitor Oliver Reece said: “When you have a scheme with very few active members and with the prospect of no future employer contributions, the members are looking for real security on their benefits.
“This means the scheme must be funded on a buyout basis minimum.”
He added that although the trustees had recognised that the surplus would have to cover buyout liabilities, they could not be sure that this would continue to be the case when the Thorn scheme was wound up.
He explained: “Even if benefits could be bought out in full at the time of the refund (to Nomura), would this remain the case as time went on?”
The Pensioners’ Association was represented by Hammond Suddards Edge pensions disputes team, Robert Ham QC of Wilberforce Chambers, Philip Engelman of Cloisters Chambers on a pro-bono basis.
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