Pension funds ‘lose out’ in lawsuits cash
12 October 2009, 3:17 pmLocal authority pension funds are missing out on millions of pounds because of their failure to pursue lawsuits over losses, according to claims this week.
A study found that between 2007 and 2009, £510m out of a total of £31bn losses on their investments during that period were recovered by UK council pension funds following class action lawsuits against companies through US courts, on the grounds of poor governance.
But it warns that a further £125m will not be recovered because of apathy by local authority funds.
The study, by class action company the Goal Group, said it was a ‘wake-up call to the UK public sector pension funds that are currently missing out on their legal right to claim damages through the US courts’.
The credit crisis, including the collapse of the sub-prime mortgages market and fraudulent schemes, has caused an increase in the number of local government pension funds seeking damages from companies and auditors. Lawsuits can take up to seven years to be resolved. In the case of UK council pension funds, Goal says that while £140m was due to be recovered between 2007/08, the figure rose to £370m in 2008/9.
Stephen Everard, its managing director, said: ‘High-profile cases have helped flag-up the benefits of class actions, but an alarming proportion, nevertheless, continues to remain unclaimed.’
The warning was backed by one local authority fund, West Midlands Pension Fund, which has pursued several class actions against firms in the US. Tony Doyle, its investment manager, equities and corporate governance, said: ‘We perceive poor governance as a risk to a fund’s long-term financial interests.
‘We, therefore, submit class actions globally, where we believe we have suffered a financial loss through fraudulent or irresponsible corporate behaviour.’ He added: ‘We have been involved in numerous class actions over the years, and have recovered more than $700,000 to date.’ Goal Group.
Source: Michael Burton, The MJ / LocalGov.co.uk | Published: 12 October 2009
