BP has lost an important legal battle in the United States that will mean 9.000 pensioners will get compensation as a result into being talked into accepting a change into benefit formulation 30 years ago. The parallels with WASPI are obvious, just because you think you have done your job in explaining pensions, doesn’t mean you’ve succeeded, Darren Philp makes a good point on his podcast, the parliamentary put the report to parliament and by-passed the DWP because the DWP would win the technical argument. Principal based rules (such as Consumer and Fiduciary Duty) are timeless and the 20 year lag on WASPI has similarities to the 30 year lag for BP’s US pensioners,
This will no doubt embolden certain BP pensioners to seek recourse to law in the UK. They shouldn’t. The UK discretionary increase recommended by the trustee is not a legal right and BP had the legal right to turn it down. Had the trustees had the right to grant an increase without recourse to BP, that would have been different.
If the BP Pensioners go to courts of law, they will lose and waste a lot of money. However , there are other courses of action which BP pensioners can and are pursuing.
Here, for those who like their judgements , are details of the US judgement – redress has yet to be worked out.
While the UK and US pensioner pension issues differ, there is a common thread in that both US and UK pensioners have challenged the Company on how it has communicated its pension promises and commitments.
Interestingly , the Federal Court claimed that BP
“committed fraud or similarly inequitable conduct”
“The plaintiffs have demonstrated by clear and convincing evidence that BP gained an undue advantage through the inequitable conduct described above, when BP violated ERISA parts 1, 2 and 4. Plaintiffs have demonstrated by clear and convincing evidence that BP gained an undue advantage of retaining its workforce by violating its fiduciary duty to communicate completely, accurately, and solely in the best interests of the Plan Participants when it chose to communicate with participants in 1989 regarding the Plan amendment and restatement and the Participants’ benefits.”
Speaking on behalf of the BP Pensioner Group, Mike Slingsby said:
”Regardless that this is a different case and in a US court, we hope BP’s leadership see the common factors and now take the opportunity to properly engage with their UK pensioners to find a solution to what is a wholly unnecessary dispute”.
I understand that after more than 100 days, BP has now responded to the BPPG and I look forward to hearing the outcome.
The discussion between BP , its trustees and its pensioners is one that could be had at many over-funded pension schemes and we reman grateful to BPPG for taking the lead. Nobody wants a class-action as happened in the United States, the US class action outcome should be a clear warning to BP globally and trustees and sponsors in the UK.
You may win the technical argument but that does not mean it has won the fiduciary case and the reputational damage from thwarting the fiduciary’s clear recommendation may be destroying more shareholder value than it could hope to create.
A well organised campaign like BPPG’s shows that corporates are vulnerable on fiduciary duty – just as the DWP are. You can’t benefit from a pension scheme and kick the can 20 or 30 years down the road, expecting that no-one remembers.