The ruling by High Court Judge Sir Andrew Morritt could lead to KPMG partners being forced to make up their plan’s estimated £65-million deficit and is likely to set off alarm bells at other firms, the Financial Times reported. The ruling made clear that pension rights which members have earned in earlier years cannot be cut back without their OK – even if the company carries out the cutback in an effort to spread benefits more evenly among employees.
The battle over the firm’s obligations to the thousands of members of its £280 million plan has been closely watched because of its broader implications given the widespread problem of pension deficits.
KPMG had maintained that the plan, which was set up in 1949, was a money purchase scheme. that used contributions to buy a particular amount of pension for individual members. If KPMG’s interpretation had been correct, partners would have escaped a legal obligation to make up the pension deficit, the report said.