Accountancy group KPMG has lost a legal case in the UK's House of Lords that means it is likely to have to find some GBP88 million to top up its employee pension fund.
The legal proceedings were launched by a group of former staff who objected to proposed changes to the firm’s pension scheme in 2000. In the course of the changes it became clear that the existing fund had fallen into deficit, which prompted questions over whether KPMG was responsible for filling the hole in the fund.
According to UK newspaper reports, the legal case eventually centered on the technical aspect of the original KPMG scheme. The accountancy firm insisted that it should be considered a money purchase scheme, meaning the company would not be responsible for ensuring it is fully funded. However an actuarial assessment found that the fund was indeed expected to fulfill guaranteed payouts to pensioners.
KPMG had already appealed unsuccessfully to the High Court and Court of Appeal, but with the House of Lords – the UK’s highest court – now refusing to hear the case, KPMG has been forced to admit defeat.
Eddie Donaldson, head of human resources, told the media: We accept today’s ruling and KPMG will now agree with the [fund] trustee an appropriate plan to ensure the scheme is adequately funded over time.
The firm has already set aside GBP13 million in 2004 and provisionally earmarked a further GBP15 million late last year to be available to deal with this outcome.