Pru settles out of court with GMB members

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The Independent Online
Prudential, the UK's largest insurer, yesterday inched closer to offering redress to victims of the pension transfer scandal as it announced an out-of-court settlement with one of Britain's biggest unions.

Prudential said it had agreed to pay compensation to 13 members of GMB, the General and Boilermakers Union, on whose behalf writs had been issued against the insurer.

The company also agreed a process to resolve dozens more cases outstanding against it from GMB members and to pay the union a "significant" contribution towards its legal costs.

John Edmunds, general secretary of GMB, said: "I am delighted that the logjam has been broken and we have achieved a full settlement for many of our members."

GMB said yesterday that in addition to Prudential, it had reached settlements with several other insurers, although it still had 700 legal cases outstanding, including many against Legal & General and TSB.

The average compensation deal reached so far was about pounds 25,000, while the cost of legal action was expected to reach about pounds 10,000 per case, the union said.

Last year, GMB was among several unions to launch mass High Court action on behalf of thousands of members who were encouraged to opt out of their company schemes and were mis-sold personal pensions instead.

A Prudential spokesman said: "We are extremely pleased to reach a settlement. We believe it has been a waste of time and resources both of GMB and of Prudential to proceed through the courts when there were preferable ways of dealing with it through the machinery already set up by the regulators."

Prudential's comments came as the company yesterday announced a 69 per cent increase in sales of the company's life, pension and investment products around the world to pounds 6.66bn in 1996. Regular premiums rose 13 per cent to pounds 516m. In the UK, single premiums rose 71 per cent to pounds 3.56bn, while regular premiums were up 8 per cent to pounds 303m.

Peter Nowell, group chief actuary at Prudential, said: "What we are seeing is that people are reluctant to commit themselves to saving for a long time."