Local authority pension funds lose out
September 11 2008, 3:39 pmUK – Local authority pension funds’ non-participation in US securities class actions resulted in over £200m ($365m) being left on the table, according to GOAL Group.
The European class action services firm said this should be a “wake-up call’’ to the UK public sector pension funds that are currently foregoing their legal right to claim damages through the US courts.
With average settlements sitting at some $54m, and filings again on the rise, it said investors and fund managers should be claiming their slice of the pie.
The firm added the typical share portfolio of a large UK local authority pension fund had become strongly international – some holding as much as 15% foreign shares. It said this was driving shareholders’ awareness that they could be left out of securities class actions in the US unless they took an active role in a lawsuit.
West Midlands pension fund assistant investment manager Fiona Hardle said: “We have been involved in numerous class actions over the years, varying in size, including Cable & Wireless and Federal Home Loan and have recovered over $500,000 to date.”
She added: “All funds have the responsibility to ensure that they are actively fulfilling their fiduciary duty to shareholders and should encourage corporate management to behave honestly and responsibly. All local authority pension funds should consider protecting their long term interests.”
GOAL Group managing director Stephen Everard it was the judgement of the legal profession that there was a clear duty of care for institutional investors to register claims on behalf of their clients and non-participation was costing investors dearly.
He said: “UK local authority pension funds are slowly waking up to this and those who do not participate, risk being left behind.”
Meanwhile, latest research from the National Association of Pension Funds (NAPF) revealed the number of UK defined benefit (DB) pension schemes that had led participation in class action law suits had doubled in the past 12 months.
The trade body’s engagement survey showed the number of DB schemes worth more than £1bn ($1.8bn) never involved in class action had nearly halved from 28% in 2007 to 15% in 2008.
The findings also showed schemes who had been lead plaintiffs or active participates in class actions had increased from 10% in 2007 to 23% in 2008.
And the amount of pension funds involved in settlements also rose from 69% in 2007 to 73% in 2008.
Steven Dignall
