Partners at KPMG, the global accountancy group, are to be forced to find as much as £60m to close the deficit in an old employee pension scheme, after the House of Lords upheld a crucial appeal verdict yesterday in favour of the scheme's members.
KPMG was taken to court by the members of its old pension scheme five years ago, after the company claimed it did not have to make good the deficit because the scheme was a defined contribution, not a defined benefit plan.
Both the High Court and the Court of Appeal ruled in favour of the scheme members. But KPMG then applied to take the case to the House of Lords. The lengthy litigation finally came to an end yesterday, after the Lords rejected the group's right to make any further appeal.
KPMG, whose UK senior partner Mike Rake earned more than £3m last year, set aside £13m in 2004, and another £15m at the end of last year, which has been earmarked for the scheme. The remaining £60m will now have to made good by the company over the next few years.
Isabel Nurse-Marsh, the head of pensions litigation at Pinsent Masons, who acted for the pensioners, said: "The House of Lords decision is of huge relief to pensioners. During several years of uncertainty they have been very worried that their pensions might be reduced. Since they are retired, our clients have no ready means to make up any cut in their pensions."
Eddie Donaldson, the head of human resources at KPMG, said: "We are pleased there is now clarity as to the nature of the scheme, and a long period of uncertainty has ended. KPMG had received strong legal advice to support its view that the scheme was money purchase in nature."Reuse content