A settlement has been signed which will allow the Lehman Brothers pension scheme to pay full retirement benefits to members and prevent it having to fall back on the Pension Protection Fund, following action taken by The Pensions Regulator.
After nearly six years of investigation and legal proceedings, companies within the Lehman Brothers group have agreed to buy out member benefits, following action taken by TPR and scheme trustees during the Lehman Brothers Financial Support Direction (FSD).
Initially, The Pensions Regulator’s Determinations Panel issued a determination in September 2010, subsequent to the insolvency of numerous member companies of the Lehman Brothers group in September 2008.
The determination said that the Lehman Brothers group should provide financial support to the Lehman Brothers pension scheme. Following this, the regulator and scheme trustees defended a number of legal challenges arising from the FSD proceedings.
At the end of June, before the settlement was announced, the estimated buy out figure was £184m.
Stephen Soper, TPR interim chief executive, said: “The estimated £184m 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.”
Tony Lomas, joint administrator of LBIE and partner at PricewaterhouseCoopers, added: “The conclusion of this significant pension scheme deficit issue is another milestone on the path to resolving the administration of LBIE.
“The agreement benefits LBIE’s creditors by securing significant contributions to the cost of the settlement from other Lehman group companies, and alleviates concerns for pension scheme members about the provision of their pension benefits.”
