LGPSs failing to recoup £370million in class action proceedings
November 18 2009, 4:14 pmUK Local Authority (LA) pension funds have lost £31bn on their investments between 2007 and 2009, according to global class action services specialist, GOAL Group.
The Group’s projections show that around £500million of these losses will be recovered by UK local authorities which choose to participate in class action lawsuits arising from that period, mainly based in the US. However, if rates of class actions do not improve, a number of pension funds will effectively be ignoring their right to recoup around £125million of recoverable funds, which will be distributed between only those who filed a claim.
GOAL said this should be a wakeup call to the UK public sector, as they are currently missing out on their legal right to claim damages through the US courts, despite cases such as North Yorkshire and Merseyside County Council pension funds in their applications for lead plaintiff statuses.
Between 2007 and 2008, almost £8.5bn was lost and £140million open to be recovered for UK local authority pension funds, and this increased to £22.5bn lost and £370million open to be recovered between 2008 and 2009.
“We have been involved in numerous class actions over the years, varying in size, including A.T. & T. Wireless, Cable & Wireless, Federal Home Loan and Royal Ahold NV,” commented Tony Doyle, senior investment manager – equities and corporate governance, West Midlands Pension Fund. “We have recovered over $700,000 to date.”
GOAL Group’s managing director, Stephen Everard, said: “It is the judgement of the legal profession that there is a clear duty of care for institutional investors to register claims on behalf of their clients. Our research shows that aside from fulfilling corporate governance responsibilities, there is also a growing need for local authorities to plug the escalating pensions gap. High-profile cases have helped flag up the benefits of class actions but an alarming proportion nevertheless continues to remain unclaimed.”
Everard added that the clear message to local authorities should be to take immediate action in order to recoup escalating losses on a permanent basis to “ensure their beneficiaries’ interests are properly safeguarded in the future”.
Source: Sophie Baker, Pensions Age | Published: 10 November 2009
