Unilever pension fund sues MAM for £100m on 'underperformance'

THE GIANT Unilever pension fund yesterday launched a £100m High Court claim against Mercury Asset Management for alleged underperformance in what is thought to the first action of its kind in the UK.

THE GIANT Unilever pension fund yesterday launched a £100m High Court claim against Mercury Asset Management for alleged underperformance in what is thought to the first action of its kind in the UK.

Trustees of the £4bn Unilever Superannuation Fund (USF) allege that MAM, which is now owned by the US investment bank Merrill Lynch, was negligent in its management of £1bn worth of the fund's assets.

The action, if successful, could trigger a flood of similar claims against pension fund managers. However, legal sources cautioned yesterday the case could take two years to reach court.

Unilever sacked MAM in March last year after the funds managed by it had underperformed an agreed benchmark by 10 per cent over 15 months. The claim filed by the trustees alleges that MAM was in breach of contract by negligently failing to take sufficient account of the risk of underperformance, particularly with regard to its UK equity portfolio which held over a third of the funds.

Richard Greenhalgh, chairman of Unilever UK and also chairman of the trustees, said the decision to start legal action had not been taken lightly. A lengthy review with its advisers concluded that the trustees had a fiduciary duty to the fund's members to start proceedings. MAM said: "We have been advised in the strongest possible terms that USF's legal action has no justification whatsoever and this claim will be contested vigorously."