Actuary of Failed UK Pension Scheme Charged with Misconduct

October 29, 2007 ( - The actuary who oversaw an Edinburgh firm's pension scheme before it collapsed in 2003 has been found guilty of eight charges of misconduct by a disciplinary tribunal at the Faculty of Actuaries in Scotland.

Among other things, David Kershaw was found guilty of failing to advise the trustees of engineering firm Blyth & Blyth on the implications of allowing two company directors to take early retirement not long before the scheme’s collapse, the Scotsman reports. Andy Scott, an actuary who was appointed as an independent trustee to Blyth & Blyth in 2002, told the tribunal that the early retirements had accounted for nearly £1m of the scheme’s £6m deficit.

The tribunal also said Kershaw was in breach of the code governing the actuarial profession when he failed to advise the company’s trustees to consider other options when they approved a change to the scheme’s normal retirement date, according to the news report. The pension age for employees was raised from 65 to 75 not long before the company went into receivership.

On behalf of Kershaw, Michael Jones QC, a member of the Scottish Bar, argued it was not the responsibility of the scheme actuary to police the actions of the company’s trustees. Kershaw was cleared of five further charges, and three of the original 16 charges had been dropped during the course of the hearing.

The company went into receivership in 2003, wiping out the pensions of about 150 staff, the Scotsman said. It was taken over in a management buy-out in the same year but the new management had no legal responsibility to plug the scheme’s £6m deficit.