Participants in the Lehman Brothers pension fund in the U.K. will receive their full retirement benefits, after an agreement to pay £184 million ($307.2 million) to fund a buyout was reached between relevant parties.
Lehman Brothers International (Europe) will fund the defined benefit payouts. In a statement, PricewaterhouseCoopers — whose partner Tony Lomas is joint administrator of LBIE — said it expects benefits to be secured under a bulk annuity policy with an insurance company “in due course.”
The joint administrators of Lehman Brothers International (Europe) and the trustees of the Lehman Brothers Pension Scheme, London, along with action by the U.K.’s The Pensions Regulator, reached the settlement after almost six years of investigation and legal proceedings, said the regulator in a statement, published Tuesday.
As part of the settlement, significant financial contributions have also been made by other companies in the Lehman Brothers group. PwC said in the statement that details remain confidential.
Stephen Soper, interim CEO of The Pensions Regulator, said in the statement that the £184 million agreed payment — the estimated buyout value based on figures as of June 30 — “will be the largest sum paid to a scheme as a result of our actions so far.”
The payments will reach 2,466 participants in the pension fund, and means the fund will not be taken over by the Pension Protection Fund.
Lehman Brothers filed for bankruptcy in September 2008. Two years later, the regulator sought a financial support direction against LBIE and other Lehman companies, and said that companies within the Lehman Brothers group should provide financial support to the pension fund. The pension fund and regulator defended a number of legal challenges against that stance.
“The trustees have overcome a number of legal challenges relating to the scope of the Pension Regulator’s powers since regulatory proceedings first commenced back in 2010,” said Susie Daykin, partner at Travers Smith, which advised the trustee of the plan, in an e-mailed comment. “This settlement finally brings this period to a successful conclusion.”
Mr. Lomas, Peter Gamester, chairman of trustees of the Lehman Brothers Pension Scheme, and a spokesman for PwC could not be reached for comment by press time.