Clyde & Co is in crisis meetings with staff over an estimated £10m shortfall in its final salary pension scheme, invested with the collapsed mutual Equitable Life.
Clyde & Co equity partners, who pay to keep the 120-member scheme going out of their share of the firm’s profits, have not yet committed to a cash call to fund the shortfall themselves.
According to several members of the scheme, the common consensus is that the fund is at least £10m below what it should be for the firm to honour its final salary pension commitments.
Finance director Peter Hasson told The Lawyer the scheme requires a much higher level of funding than the equity partners have previously made. “It’s a combination of the situation at Equitable Life and the underperformance of the stock market,” he said.
Clyde & Co is entitled to reduce the level of payments members of the scheme receive, which Hasson did not rule out.
He stressed that there was no risk of the scheme becoming insolvent, but would not discuss the size of the shortfall.
Members of the final salary scheme, which was closed in 1997, include current and former salaried partners as well as highly-paid non-lawyers such as master mariners and senior legal executives.
Many more staff at Clyde & Co who joined after 1997 have lost money after investing in a new fund that was also managed by Equitable Life.
In a statement released to The Lawyer, Clyde & Co said: “The most recent actuarial review shows funding in excess of the Government’s MFR [minimum funding requirement]. But in line with other final salary schemes, has shown that the level of funding required going forward is considerably higher than previous levels of contribution. Any employer with a defined benefit scheme is facing similar issues. In line with other responsible employers, we are reviewing the options and today [Thursday 3 April] began consultation with the members on the way forward.”