UK - Short-changed members of insolvent schemes are set to launch mis-selling claims against employers in a bid to win their full pension entitlement.
The attack is being spearheaded by members of the £119m ASW Pension Plan who have compiled a list of 15 potential legal avenues that scheme members could take if they are out of pocket on wind-up.
Currently 3000 members of the ASW Pension Plan are facing cuts of up to 90% in their pension entitlement after their employer went bankrupt in July.
ASW member John Towill said: “We are looking at taking legal action on the grounds that no one ever warned us of the risks with occupational pensions.”
Members of the £6.4m Sea-land Pension Plan – who were left out of pocket when the parent company, The Maersk Company, decided to close the scheme with only MFR funding – are considering similar action.
But lawyers are split over whether such mis-selling cases will stand up in court.
Hammond Suddards Edge partner Francois Barker believes there is a good case that members did not have the risk of a final salary scheme flagged up.
He said: “There has been a tendency in the industry to portray final salary benefits as guaranteed. You see booklets issued by trustees that refer to these benefits.”
However, Mayer Rowe & Maw partner Philippa James thought a member victory was “unlikely”.
She said: “In occupational pensions there is no selling process, staff join an occupational pension scheme if they choose to do so. The company provides it on a voluntary basis.
“If someone is going to bring a claim it would have to be proved that the employer had agreed that it would provide members with a full pension on a practical level, subject to a solvency guarantee.”
But she admitted that there is sometimes a solvency agreement in the trust deed and rules of older schemes.
“It is quite rare, but I have come across a couple of schemes that have a built in solvency guarantee that predates the Pensions Act.”
The Pensions Regulator (TPR) has granted 11 master trusts extensions to apply for authorisation, as it confirms it has received 22 applications ahead of the 31 March deadline.
Aegon Master Trust, Fidelity Master Trust and Ensign have sent off their authorisation applications to The Pensions Regulator (TPR).
Self-administered pension funds spent £15bn on payments to pensioners in Q4 2018, but received just £12bn in contributions (net of refunds), Office for National Statistics (ONS) data reveals.
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