National Power faces pounds 200m pension repayment

National Power could be asked to repay more than pounds 200m it removed from its employees' pension scheme in just one of a deluge of claims likely to hit the privatised electricity companies, following a landmark ruling from the Pensions Ombudsman.

A spokesman for the campaign representing pension fund members last night urged all the electricity companies to replace surplus cash taken out of the schemes for the employers' benefit. The total sum involved could approach pounds 1bn.

It also emerged yesterday that most electricity firms had twice taken surplus cash out of their pension funds, which are part of the main Electricity Supply Pension Scheme - once after an actuarial valuation in 1992 and again in 1995.

The claim follows the provisional judgment by Dr Julian Farrand, the ombudsman, in a case brought by two National Grid pensioners. The company had decided to allocate 70 per cent of a pounds 62.3m surplus to itself, some of which went to fund voluntary redundancy and early retirement payments. The other 30 per cent went to enhance pensions benefits.

Dr Farrand said the Grid had misused the pension fund surplus, because the scheme's rules stated the surplus could not be paid to the employer.

The biggest bill could be faced by National Power, which is thought to have used pounds 176m to fund early retirement payouts out of a pounds 303m surplus in 1992. In the second pension fund valuation last year National Power had a surplus of pounds 73.7m, part of which it said at the time would be held in the scheme and later used to fund early retirement costs. National Power declined to comment yesterday.

Of the other companies facing huge bills, Nuclear Electric could have to repay pounds 70m, while PowerGen could have to find pounds 59.4m. In all cases the companies would have to pay interest on top at 8 per cent a year.

Peter Woods, from solicitors Stephens Innocent, which represented the National Grid pensioners, said: "The impact of this will be horrendous for the companies. I don't know how much money these guys have got, but this judgment must have an impact on their balance sheets."

Jack Taylor, a director of the Association of Electricity Supply Pensioners, said trustees of all the funds involved should apply to the High Court to establish whether the judgment applied to them. In any case the companies are certain to take the matter to court if Dr Farrand confirms his findings when he publishes his final judgment in the National Grid case in three weeks.

The campaigners have been fighting to remove variations in benefits offered by different schemes since the industry was split up after privatisation.

Mr Taylor, a former marketing director of the Electricity Council, said any surpluses returned by the companies should be used for this purpose.

He said: "We were all in the same scheme before privatisation but when it later came to sharing out these surpluses some got benefits and others didn't.

"If they put the money back which they've taken out they should use it to restore equity for the pensioners."

A spokesman for the scheme said the ruling was being scrutinised but declined to comment further.

Comment, page 25

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Joe Cocker performing on the Stravinski hall stage during the Montreux Jazz Festival, in Montreux, Switzerland in 2002
musicHe 'turned my song into an anthem', says former Beatle
News
Clarke Carlisle
sport
Sport
footballStoke City vs Chelsea match report
Arts and Entertainment
theatreThe US stars who've taken to UK panto, from Hasselhoff to Hall
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Life and Style
Approaching sale shopping in a smart way means that you’ll get the most out of your money
life + styleSales shopping tips and tricks from the experts
News
newsIt was due to be auctioned off for charity
News
Coca-Cola has become one of the largest companies in the world to push staff towards switching off their voicemails, in a move intended to streamline operations and boost productivity
peopleCoca-Cola staff urged to switch it off to boost productivity
Environment
Sir David Attenborough
environment... as well as a plant and a spider
Voices
'That's the legal bit done. Now on to the ceremony!'
voicesThe fight for marriage equality isn't over yet, says Siobhan Fenton
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

SThree: Graduate Recruitment Consultant

£20000 - £25000 per annum + OTE £35000: SThree: SThree are a global FTSE 250 b...

Day In a Page

Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there