The Law Society has been forced to shore up its pension fund with emergency funds after suffering a loss of £12m due to a misguided investment strategy.
Treasurer Ken Byass wrote to Law Society Council members late last year stating that the fund has "deteriorated to around 80 per cent" and "a contribution of approximately £12m would be required to restore the fund to 100 per cent". The Government requires such final salary pension schemes to equal 90 per cent of their maximum capacity by April 2002. In order to comply, Byass needs to inject the society's entire general investment fund, one of its two major emergency reserves, into the pension fund. Byass wrote: "[The] shortfall has been exacerbated by the fund being overweight in equities The fund trustees are required to consult with the Law Society over the fund's investment mix Possibly because until comparatively recently the treasurer automatically became chairman of the trustees, no defined mechanism for such consultation has existed." Byass now estimates that the amount of money needed to take it to 90 per cent is lower than £8m. He said the society may have to close the pension fund to new members from April 2002 and replace it with a different model.