BI’s Article search uses Boolean search capabilities. If you are not familiar with these principles, here are some quick tips.

To search specifically for more than one word, put the search term in quotation marks. For example, “workers compensation”. This will limit your search to that combination of words.

To search for a combination of terms, use quotations and the & symbol. For example, “hurricane” & “loss”.

Login Register Subscribe



LONDON-Employers are entitled to use surplus pension assets to enhance severance benefits, a London High Court judge ruled, reversing an earlier decision.

While sponsors of private pension plans welcomed the ruling, the plan members who filed the action were granted leave to appeal the decision to the U.K. Court of Appeal.

If the ruling stands, it could create liability exposures for actuaries called on to assess whether surplus assets are available in pension funds, warned an attorney who represented the plan members.

In the ruling, handed down earlier this month, High Court Justice Walker determined that two British electricity companies had acted legally in using surpluses in their joint pension fund to make enhanced pension payments as part of severance packages for workers.

According to Angela Dimsdale Gill, a partner with London law firm Lovell White Durrant, the decision means that pension actuaries will have to make value judgments on whether employers' use of surplus pension funds is "reasonable," rather than simply determining the size of the surplus.

"We maintained that actuaries should only be called upon to deal with technical matters related to the pension fund," Ms. Dimsdale Gill said. Anything more "could have enormous manifestations for actuaries' professional indemnity insurance," she added.

The decision by Justice Walker overturned a Feb. 7 ruling by Pension Ombudsman Julian Farrand-the pension ombudsman adjudicates pension member complaints-that National Grid P.L.C. had misused 75 million pounds ($123 million) of its pension fund's surplus to enhance pension benefits for workers who had accepted a voluntary retirement offer.

The judge also ruled that another utility company, National Power P.L.C., had acted legally in using 300 million pounds ($492 million) of a pension fund surplus for similar purposes.

The National Assn. of Pension Funds, which represents sponsors of employer-provided pension plans, welcomed the High Court decision as "sensible and practical."

Ann Robinson, director general of the NAPF in London, said that if the ombudsman's decision had been upheld it would have made employers reluctant to contribute more than the bare minimum to employees' pensions and might even have prompted them to abandon defined benefit plans altogether.

The employees who filed the initial action challenging the employers' right to the surplus pension assets were given leave to take their case to the U.K. Court of Appeal, though it is likely to be at least six months before the case is heard.