Lucas row pensioners plan court challenge

Click to follow
The Independent Online
AN ACTION group of 70 pensioners is mounting a legal challenge against the decision last November which allowed Lucas Industries to claw back pounds 150m from a pounds 600m surplus in the company pension fund.

Representatives of the Lucas Retired Members Association (Central Birmingham) are challenging the payment to the company by serving a High Court summons on 10 trustees of the Lucas Pension Fund.

Douglas Taylor, head of the action group, said: 'We are asking the High Court to decide whether the trustees acted properly in giving Lucas Industries pounds 150m when the trust deeds prohibited such payment.

'We say that the pension fund exists only to pay pensions and belongs to its members. The pensioners are very angry that the trustees decided to give pounds 150m from their fund to Lucas Industries in November 1991.'

Although Lucas is not directly involved in the court action, Brian Mason, the company's personnel director, and David Hankinson, former finance director, are among those named in the summons. Mr Hankinson resigned from the board in March, just three years after joining the company from Rover.

Lucas barely broke even in the six months to 30 March before inclusion of the pension windfall, which amounted to pounds 90m after tax.

When the results were announced in March, however, Sir Anthony Gill toned down the significance of the windfall. He doubted whether the decision to hold the interim dividend 'would have been any different if we had not received the distribution.'

Of the remaining pounds 450m surplus, half was retained in the fund and half was used to improve pensioners' benefits. The company has 39,000 pensioners in the UK.

A spokesman for Lucas said yesterday: 'The trustees acted only after receiving the most thorough independent legal advice and after considering all available alternative courses of action that could have been taken to reduce the surplus in the fund.'

He added that in 1991 Lucas acted to reduce the surplus as a result of changes in the law. These meant that a fund where assets exceeded liabilities by more than 5 per cent had to reduce the surplus or lose its tax-exempt status.

Lucas, which is not party to the court proceedings, said it 'has acted throughout in compliance with all legal requirements'. The matter had been scrutinised by the Occupational Pensions Board.

Moreover, Lucas said the trustees took into account that their action would result in benefit improvements of more than pounds 1bn for employee members and pensioners since the mid-1970s.