Colin, A late response, As far as I know the resident Radical Economist expert on this subject (at least for the U.S. - though I believe she's also looked at this in other countries) is Theressa Carlducci (or something close to this - ) at Notre Dame Univ., Economics Dept. I think she just co-authored a book on this. Hope this is helpful, Ron Baiman Roosevelt Univ., Chicago On Sun, 9 Feb 1997 [EMAIL PROTECTED] wrote: > > This is posted from another list with the original poster's permission: > > CBPENETers, > > I keep reading of cases of disputes about the "ownership" of pension > surpluses. I attach an article from today's Daily Telegraph about such a > dispute. > > Here in my own university the fact that faculty salaries have not increased > over the last few years has had the effect of producing a surplus (because > the pension fund anticipated that our salaries would be higher than they > currently are), and the faculty association and the university > administration are at loggerheads over who the surplus belongs to. > > Has there ever been an article published about this topic? I cannot recall > seeing any academic analysis of the problem. I recall that the closure of > Dominion food stores about 12 years ago was surrounded by controversy about > the ethics of employee pension fund management and trusteeship. Does anyone > have any thoughts, citations or analysis to offer on the topic? > > Colin Boyd > > ---------------------------------- > > Electronic Telegraph > Saturday 8 February 1997 > > Power firms 'misused' pension surplus > By Michael Smith > > (the "$" sign indicates one english pound in the following article: Colin) > > PRIVATISED electricity companies wrongly removed $1 billion from the > industry's pension funds to finance redundancies and to take holidays from > contributions, according to solicitors acting for pensioners. > > The claim follows a ruling yesterday by Dr Julian Farrand, the pensions > ombudsman, that National Grid had "misused" the $44 million it removed from > the pension scheme after an actuarial valuation in 1992 found a surplus in > the fund. > > The money was used to pay for early retirements and to make the pension > contributions that the company itself would otherwise have had to pay from > profits. Peter Woods, solicitor for the pensioners who complained of the > breach, said that the same misuse had occurred within 13 other electricity > firms. > > Fourteen of the privatised electricity companies used a total of $500 > million in surplus pension funds to pay redundancies and take holidays from > contributions after the 1992 valuation, Mr Woods said. A similar exercise > took place after a 1995 valuation found a surplus in the fund, making a > total of more than $1 billion in "misused" pension funds, he added. > > "The ombudsman's judgment should apply across all the electricity supply > schemes," Mr Woods said. "Where the companies have used surpluses in the > same way they should have to repay it with interest. > > "In respect of the 1992 valuation, the total that should be repaid is > around $500 million. But there was a similar sum in respect of the 1995 > valuation, making a total of $1 billion." > > The power firms expected to be most affected by the ruling are National > Power, which used $176 million for "early retirement deficiency payments", > Nuclear Electric, which used $70 million, and PowerGen which used $59 > million. > > Dr Farrand found that using the money to pay for redundancies or employers' > pension contributions was a breach of the company's duty to exercise the > funds in the best interests of the pensioners rather than its own. > > The scheme's clauses and rules made no provision for pension funds to be > used by the employer, and any amendment to allow it was specifically > excluded, he said. > > "The group trustees have at the insistence of the principal employer > misused the surplus," Dr Farrand ruled. The $44 million should be repaid to > the pension scheme with an additional $2.3 million interest. > > National Grid said it had acted on the advice of its lawyers at all times > and was now discussing the ruling with them with a view to making an appeal > to the High Court. > > "At all times the legal advice has fully supported the company's view that > the arrangements were properly and lawfully made," a National Grid > spokesman said. "It remains our view that the arrangements represented a > fair allocation of the surplus for the benefit of the membership and the > company." > > The complaint against National Grid was brought by two pensioners, David > Laws and Reginald Mayes, after the company decided to allocate 70 per cent > of the 1992 surplus to itself and only 30 per cent to fund improvements. > > Mr Laws, 59, an electrical engineer from Chatham, Kent, who took voluntary > redundancy in 1992, said: "That money should have been left in the scheme > and used for the benefit of more than 200,000 pensioners." > > Mr Mayes, 73, a former senior engineer with the old Central Electricity > Generating Board, who lives in Ashstead, Surrey, said: "It shows that these > big executives have got a duty to their staff. Up to now nobody has been > sure who owns the pension money. The executives seem to have considered > that they had the right to manage it themselves." > > > ---------------------------------------------------------------------------- > Colin Boyd, Dept. of Management and Marketing, > College of Commerce, University of Saskatchewan, > 25 Campus Drive, Saskatoon, Sask., CANADA S7N 5A7 > > [EMAIL PROTECTED] > Phone: (306) 966 8436 Fax: (306) 966 8709 > ---------------------------------------------------------------------------- > > >
