A settlement agreement signed after nearly six years of investigation and legal proceedings will allow the Lehman Brothers pension scheme to pay full retirement benefits to members and avoid the scheme’s entry into the Pension Protection Fund (PPF).
Action taken by The Pensions Regulator and the scheme trustees during the Lehman Brothers Financial Support Direction (FSD) case has now resulted in companies within the Lehman Brothers group agreeing to buy out member benefits in full. As at 30 June 2014 the estimated buy-out figure was £184 million.
Details of the case and the settlement are published today in a report by the regulator in section 89 reports.
Interim chief executive Stephen Soper said:
“The estimated £184 million settlement payment will be the largest sum paid to a scheme as a result of our actions so far.
“This is a pleasing and appropriate settlement for the 2,466 members in the Lehman Brothers pension scheme, and shows we will not hesitate to pursue regulatory action to protect members’ benefits and PPF levy payers where we believe it is appropriate.
“The regulator has increasingly been required to engage its anti-avoidance powers to secure the retirement benefits of members and protect the PPF. This case demonstrates that the regulator’s anti-avoidance powers can be used effectively, even in highly complex international insolvency situations.”
Following the insolvency of numerous member companies of the Lehman Brothers group in September 2008, the regulator’s Determinations Panel issued a determination in September 2010 that companies within the Lehman Brothers group should provide financial support to the Lehman Brothers pension scheme.
The regulator and scheme trustees then defended a number of legal challenges arising from the FSD proceedings including in the Supreme Court, which confirmed in July 2013 that FSDs were effective against insolvent targets, in addition to the case of Storm Funding which was heard in the High Court in October 2013 and which ruled that the regulator was not limited to the s75 debt when requiring multiple targets of regulatory action to provide support to a scheme.
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