KPMG’s battle with its pensioners is set to go to the House of Lords,
Accountancy Age can reveal.
The firm has until the end of this week to petition the Lords to appeal the
verdict of the Court of Appeal, which ruled in favour of the pensioners just
under a month ago.
Rules on appeals state that any petition must be lodged within a month of the
verdict, a deadline that KPMG is planning to meet.
The news will prolong the agony for the estimated 7,000 members of the
scheme, around one in 10 of whom are already drawing their pensions.
The battle hinges on whether or not KPMG was operating a defined benefit or a
defined contribution scheme. The firm maintains that the scheme was defined
contribution in nature, meaning employees would draw retirement benefits from
individual pension pots to which they had contributed.
Pensioners say it was defined benefit in nature, meaning that KPMG pays a
pre-agreed pension amount, commonly as a proportion of an employee’s final
If the Lords rule in favour of the latter, the firm would be likely to have
to pay an extra £58m into the scheme to meet its current deficit under the most
recent actuarial calculations.
A petition to the Lords does not mean the case will necessarily go ahead, but
KPMG must submit the petition to keep its options open. The firm is likely to
take further advice before proceeding.
In the Court of Appeal, judges had refused KPMG leave to appeal. That still
left open the option of a petition, however.
The row is embarrassing to the firm, which offers advice to firms on pensions
and audits their schemes. It has so far lost the case in front of both the High
Court and the Court of Appeal.
The row related to the firm’s ‘pre-2000’ scheme. The scheme dates back to
1949, and new arrangements were made after April 2000 for pension provision.
The total value of the scheme is thought to be around £280m.
KPMG has already added £13m to the scheme since the row began, though it
insisted when it did so that the decision had been taken before the initial High
Court ruling had been made.
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